Nifty
closed almost flat (+0.29%) for the week marked by mixed earnings, GST/ITC
& Global Central Bank induced volatility
Market Wrap: 21/07/2017 (17:00)
NSE-NF (July): 9911 (+23; +0.23%) (TTM PE: 25.09;
Near 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9911)
NSE-BNF (July): 24255 (+20; +0.08%) (TTM PE: 30.51;
Near 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24257)
For 21/07/2017:
Key
support for NF: 9865-9830/9810
Key resistance for NF: 9960/9985-10005
Key support for BNF: 24250-24000
Key resistance for BNF: 24350-24500
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
10005 area for further rally towards 10050-10115 & 10195-10250 in the short
term (under bullish case scenario).
On the flip side, sustaining below 9985-9960 area, NF may fall
towards 9905/9865-9830/9810 & 9775- 9715 area in the short term (under bear
case scenario).
Similarly, BNF has to sustain over 24350 area for further rally
towards 24500-24700 & 24875-25050 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24300 area, BNF may fall
towards 24150/24000-23900 & 23750-23500 area in the near term (under bear
case scenario).
Nifty Fut (July) today
closed around 9911, up by almost 23 points (+0.23%) after an volatile trading
session, which brought the index to a day low of 9833 and from there it made a
smart recovery to a high of 9920, helped by positive global cues (some fall in
EUR tracking subdued inflation forecast by ECB professional forecasters) and
ongoing forced P-Note related FNO short covering coupled with rally in RIL
& Wipro.
Indian market today opened around 9900 (Nifty Fut), in slight
green tracking subdued global/Asian cues, but supported by upbeat report card
from RIL & Wipro yesterday after market hours. But soon after opening in
positive tone, it succumbed to selling pressure after RIL announced various
sops related to its telecom venture (R-Jio) and even a 1:1 free bonus for its
share holders at its AGM today.
As par some reports CAG has founded huge revenue under reporting
from several Indian telecom firms for the FY: 11-15 and all these has affected
the telecom sector today. R-Jio has also launched digital data cable TV and
thus the listed cable TV firms (Dish/Sun TV) has also succumbed.
There were also some reports
that Govt may change its FY from this year itself (from April-March to Jan-Dec)
and apprehension about presenting the FY-19 budget by Nov’17 (another
market/economy disruption?).
Also, some of the earnings released today may be quite subdued
and among them, Ashoke Leyland may be
also affected the overall market sentiment being a MHCV manufacturer, it’s an
indication of underlying tepid core economic activity; although the management is
quite upbeat for Q2 on the back of GST & Govt capex benefit.
But some positive news such as Govt is finalizing the stake
sale/privatization of Air India & BEML in the last hour of trade may have
also supported the Indian market sentiment today. But Govt has also confirmed
no intention to sell the SBI stake as of now.
In a significant development after market hours today, Essar Oil
has announced that the $13 bln deal with the Russian firm Rosneft has been
approved from the Govt in all aspect and the deal will be complete by this
month; previously the deal was stuck at Indian home ministry level, citing
security/defence issue of the Pak border port Vadinar.
This may be a good news for the Indian banks having huge exposure
to the stressed Essar group, currently under NPA/IBC cases; Essar may pay back
those banks (SBI, ICICI, Axis etc) 50-55% of their overall exposure.
But whatever be the narratives, Indian market is now being
bought at every dips because significant short positions may be still trapped
in the system courtesy forced P-Note FNO short covering and the epic NSE tech
disruption on 10th July, after the SEBI notification.
Nifty was today supported by Wipro (+6%; upbeat Q1 report card,
but subdued guidance), RIL (+4%; upbeat Q1 report card; strong petchem margin
& retail sales and R-Jio optimism); ZEEL, Kotak Bank & other IT packs
(TCS/INFY/HCL Tech).
Nifty was today dragged by Idea, Bharti Airtel (R-Jio telecom
disruption), Lupin/Sun Pharma (US FDA concern) & HDFC Duo.
Globally, most of the
major Asian markets were almost flat today tracking
subdued global/Asian cues after surge in EUR despite Draghi’s best effort to
sound like a dove, considering the currency strength, which may hamper the
export driven growth of the EZ economy.
But, Draghi’s indirect hints of QE tapering discussions
yesterday may have ignited the EUR, although EUR bunds has not reacted
adversely so far, keeping the yields almost flat; as par latest BBG report, ECB
may consider QE tapering signal in its Oct meet, if not in the Aug Jackson Hall
Symposium. Thus, the overall impact on the risk assets (EQ) market may be quite
limited today.
Overall, Draghi may be slightly pessimistic about tepid EZ inflation,
but was very optimistic about growth & economic prospect (robust recovery
of EU economy); thus ECB may be slowly shifting from accommodative/neutral to
normalization/tightening mode and will gradually provide more signals to the
market going ahead.
It now seems that ECB may
follow Fed’s actual path of QT/QE tapering, which is expected to start from
Sep’17 if there is no terrible US economic data or political event (like Trump
impeachment); if Fed indeed starts or provide a definitive indication of QE
tapering, then ECB may be bound to follow and it may be further turn out to be
a global coordinated QT (Fed starts the QE first and it will also end first;
rest will follow).
Overnight US market (DJ/US-30) also closed almost flat (-0.13%),
dragged by the strong EUR and ongoing US political tensions with Trump and
dragged by retails/consumption shares, but supported by Tech & some M&A
news. Overall, double digit earnings growth hopes may be also supporting the US
market sentiment right now.
As par reports, now Trump may be investigated over his business,
various financial dealings and also a huge DB bank loan all linked with Russia
apart from the election meddling issue.
Another WAPO report was that Trump may try to pardon himself,
his family and all the stakeholders related to this Russian issue as par his
Presidential power!!. Thus, politics may take greater role than economics for
the US/global market in the coming days, which may also force the Fed to be in
the sideline.
Elsewhere, Australian market (ASX-200) closd around 5723, almost
down by 0.70% despite plunge in AUDUSD today amid some dovish jawboning by a
RBA member undermining the neutral rate of 3.5% issue; but still AUDUSD has
gained almost 1% for the week and coupled with that strong AU job data may be
affecting the prospect of AU exports as despite dovish jawboning by RBA today,
market may be expecting an imminent rate hike.
Japan (Nikkei-225) closed around 20010, down by 0.22% on
strength of Yen and also affected by energy shares.
China (SSE) closed in red around 3237 (-0.23%) tracking subdued
global cues despite a net injection of 40 bln Yuan today; so far PBOC has
injected 510 bln Yuan this week against last week’s figure of (-) 70 bln Yuan (drain
out); month end tax related outflow issues may have prompting the
PBOC to
infuse some liquidity in the system in order to kept it neutral as par its
prudent monetary policy aiming at gradual deleveraging of the Chinese economy.
Fall in iron ore prices may have also affected the China & AU market today.
Hong-Kong, South-Korea was almost unchanged on the weekend. Oil
was also trading almost flat around $47 (+0.15%) ahead of US oil rigs data
(Baker Huges) and Monday’s meet between OPEC-NOPEC producers at Russia;
although probability of further deep production cut may be remote.
Gold is trading around $1248, up by almost 0.30% on weak USD and
ongoing US political tensions; it’s also being supported by huge physical
demand from China, Hong Kong and India; although India’s sudden demand surge
may be related to seasonal (marriage & festive seasons) and GST related (exceptional
one time demand) as tax has been increased from 1% to 3%.
Looking ahead, Gold has
to sustain over 1250-1260 area for further rally towards 1275-1295 area;
otherwise it may fall again 1235/1214-1205 area.
SGX-NF
BNF
GOLD
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