Market Mantra: 19/10/2017 (16:00)
SGX-NF: 10195 (-42)
For the Day: updated at 09:30
Key support for NF: 10190-10150
Key resistance for NF: 10255/10275-10325
Key support for BNF: 24400-24000
Key resistance for BNF: 24600-24950
Hints for positional trading:
Technicals indicate that, NF has to sustain over 10325 area for further rally towards 10380 -10455 & 10495-10585 area in the short term (under bullish case scenario).
On the flip side, sustaining below 10305-10275 area, NF may fall towards 10190-10150 & 10125/10060 -10015 area in the short term (under bear case scenario).
Similarly, BNF has to sustain over 24600 area for further rally towards 24855-24950 & 25050-25250 area in the near term (under bullish case scenario).
On the flip side, sustaining below 24550 area, BNF may fall towards 24400-24300 & 24100-24000 area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Oct) may start “Samvat 2074” muted around 10217, on mixed global cues on China growth pessimism and higher global bond (US/EU) yields on hopes of central banks’ QT.
Today China reported the “man-made” GDP for Q3 at 6.8% vs estimate of 6.8%; prior: 6.9%; although it was as par expectations and also very good despite ongoing China deleveraging, some market participants was also looking for 7% GDP after upbeat projection by PBOC Gov few days ago.
Although, yesterday’s China Prez’s comments about financial markets has no major negative, it has expressed great concern for Chinese housing bubble and basically stressed that housing is for “living” and not for “speculation” or “trading”; thus negative for China property developers and construction industry which is a major driver for Chinese growth. HK market may have also reacted adversely for this China property curb, affecting the overall regional market sentiment, including India/SGX-Nifty.
Another point is that China Prez Xi did not specify any GDP target for next 5-10 years yesterday, which is unusual for such party conclave. Thus market may be little disappointed as China may prefer to cool down a little bit in the coming years considering its deleveraging effort, production capacity curtailment and preference of environment over economic activity. In 2002 & 2012, China grows at 9.6% & 7.5%, whereas growth was at 14.3% in 2007; presently China may be well on track to meet its GDP/capita growth doubling target from 2010 levels by 2020 (as par 2015 projection by the Govt).
Thus, China growth pessimism for next 20-30 years may be affecting the risk-on sentiment to some extent today despite upbeat IIP, retail sales & a modest GDP data.
Overnight US market closed in another record high on upbeat guidance from IBM (+8.9%), hopes for decent earnings growth in Q3 coupled with higher US bond yields beneficial for banks and Yellen extension optimism; extension for another term of Yellen as Fed Chair may be positive for US stock market.
DJ-30 closed around 23158, up by almost 0.70%; S&P-500 has gained by 0.07% to close at 2561, while NQ-100 was closed almost unchanged (+0.01%). Overall US market is being supported by solid earnings growth, stronger GDP this year coupled with hopes of US tax reform by Trump. Also a globally synchronized recovery with decent inflation from EU to China & US along with gradual QT by central bankers is helping the overall risk trade (goldilocks rally).
US stock future (SPX-500) is now trading around 2553, down by almost 0.30% amid muted global cues on China pessimism & geo-political risk from Spain/Catalonia/NZ and renewed NK rhetoric. As par latest NK warning, “US could face unimaginable strike at an unimaginable time” due to its war-mongering navy drill at Korean Peninsula with SK.
But if this US tax cut legislation will not pass by this year, one can also expect a drastic fall of the US stock market in the coming months. Also, market may have already discounted the US tax reform initiative by Trump and thus even if it passed by Dec’17, it may not have any major impact on the market immediately until implemented in a retroactive way, effective from Jan’17.
Back to home, Indian market (Nifty Fut/India-50) is closed today & tomorrow for holiday, although a symbolic brief one hour trading will be held today in the evening to mark the auspicious start of “Samvat 2074” (Hindu new year/Diwali/Laxmi Puja). Market is set to start the new year with some disappointments as Nifty-Fut (Oct) may open around 10175, almost down by 0.62% on muted global cues.
Indian market may be also concerned over stretched valuation over muted Q1 earnings and so far Q2 earnings are also mixed on surging NPA coupled with slower growth due to spillover effects of DeMo & GST. For Samvat-2073, Nifty gained by over 16% against muted EPS growth, almost flat.