Market Wrap: 31/05/2017
(17:00)
NSE-NF (June): 9629 (+9;
+0.10%) (TTM PE: 24.36; Near 2 SD of 25; TTM EPS: 395; NS-9621)
NSE-BNF (June): 23335
(+83; +0.36%) (TTM PE: 29.47; Near 3 SD of 30; TTM EPS: 795; BNS-23425)
For 01/06/2017:
Key support for NF: 9595/9560-9530/9510
Key resistance for NF:
9645-9680
Key support for BNF:
23150-22950
Key resistance for
BNF: 23400-23500
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9680 area for further rally towards 9725-9770
& 9825-9865 in the short term (under bullish case scenario).
On flip side, sustaining below 9660
area, NF may fall towards 9595/9560-9500 & 9460-9400 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over 23400
area for further rally towards 23500-23650 & 23875-24000 area in the near
term (under bullish case scenario).
On the flip side, sustaining below 23350
area, BNF may fall towards 23150-22950 & 22750-22550 area in the near term
(under bear case scenario).
Nifty
Fut (June) today closed around 9629, almost flat (+0.10%) after making a day
high of 9642 & low of 9607 in another day of consolidation as market turned
cautious ahead of Q4 GDP and ongoing squabbling about GST rate structures &
lack of any meaningful fresh domestic triggers.
Indian
market today opened almost flat following mixed
global cues. Overnight, US market finished slightly lower (-0.24%) amid mixed
economic data & renewed EU & US geo-political concern; core PCE came
subdued on YOY basis and together with that some dovish comments by two
influential Fed members may be casting some doubt about June rate hike;
although FFR is now indicating above 85% probability of the same.
In the morning, China’s official service & MFG PMI came just
above estimate (slightly upbeat) and thus Asian markets were trading mixed (China
was positive, while Japan was in slight negative due to tepid IIP data). An
upbeat PMI data from China may be an indication that “all is not bad” there;
thus fears of Chinese slow down may be overblown. Still, market will look into
other private PMI data & GDP in the days ahead. Also, some contradictory opinion
polls in UK for the election next week has kept the EU market muted.
Apart from the subdued global cues, Indian market was also under
some stress today amid ongoing squabbling about GST rates & structures
among various stakeholders. Although, Govt may be still optimistic about a
hassle free 1st July roll out, market may be not so much confident;
there are high risks of a GST disruption for the Indian economy in Q2FY18.
There was some initial buzz that RBI may announce further
policies (hair cut) for the NPA resolution (ordinance) after its marathon
meeting with the banks for the last few days, but nothing was announced today,
which market does not know. As a result, banking counters were range bound
today.
Overall, DII(s) are continuing their buying support to the
market, being flushed with MF/SIP funds amid ongoing 3rd anniversary
of “Modinomics”; but FII(s) are steadily selling not only in the spot/cash
segment, but also trimming their net long positions in the FNO as the market is
hovering around life time high and valuations are also extremely stretched;
despite optimism about monsoon; Q4FY17 earnings may be termed as mixed so far.
Nifty was supported today by M&M (upbeat Q4 report card and
better prospect of Tractors due to monsoon optimism), Ultratech Cement (short
covering & buzz of JP deal getting closer ?), ICICI Bank (MSCI index factor
& JPA NPA payment buzz as Ultratech deal getting closer ?), Maruti &
rebound in Pharma shares.
Nifty was dragged by IT, Coal India, RIL, Tata Steel & PSBS
(SBI/BOB). But, towards the closing session, some news flashed that JLF lead by
SBI may offer a SDR to R-COM and thus there were some rallies into the ADAG
group of shares. Curiously, RIL is continuing under pressure may be because the
ADAG group (R-COM) still uses the “Reliance” brand name; as par some reports,
overseas retail investors may lose faith on the “Reliance” brand after this
R-COM/ADAG debt default fiasco.; it may be an indication of corporate India’s
stressed B/S and debt bomb.
The present R-COM crisis may be a reminder of R-Power fiasco
(IPO listing) in 2008, followed by Lehman Brother induced global & Indian
market crash. Market may be concerned that even after deleveraging &
core/non-core assets sales and repayment of Rs.25000 cr debt, R-COM may be left
with another Rs.16000 cr debt with little operating income producing assets to
service the remaining debt without any meaningful assets!!
An ADAG loan default/NPA may be a serious blow to the highly
leveraged corporate India. Even, MDAG group (RIL) may come under pressure in
that scenario, which is primarily responsible for the present stressed scenario
of the telecom sector, including R-COM. Also, 2-G scam related spectrum auction
fiasco and subsequently exorbitant high prices of the same may be responsible
for the present bankruptcy situation of the Indian telecom sector. After infra
& textile related NPA, telecom NPL may be another major headwinds for the
Indian Banking system. Thus, Govt/Banks/PSBS may be bound to help R-COM by
various SDR in order to control the telecom NPL crisis & any panic
situation thereby.
Meanwhile, Indian GDP just flashed as 6.1% against estimate of
7.1% for Q4FY17 (prior: 7%); the figure may be terrible at a glance and may
also bring back the DeMo concern. But, combination of a tepid GDP along with
lower inflation may also renew the rate cut pressure on the RBI in the coming
months. As par TCA, adverse/muted effect of DeMo, new WPI, IIP data may be some
of the reasons behind tepid Q4 GDP no, which may derail India’s tag of “fastest
growing economy in the world” in the days ahead.
DeMo blues controversy may be again come to the forefront as a
result of subdued GVA:
Q4FY17 GVA: 5.6% (YOY: 8.7%)
Q3FY17 GVA: 6.7% (YOY: 7.3%)
SGX-NF
BNF
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