Market Wrap: 16/08/2017 (17:00)
NSE-NF (Aug):9907 (+91; +0.93%) (TTM PE: 25.05; Nr.
2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9897)
NSE-BNF (Aug):24495 (+288; +1.19%) (TTM PE: 30.74;
Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24438)
For 17/08/2017:
Key support for NF: 9900/9860-9825
Key resistance for NF: 9930-9980
Key support for BNF: 24475-24375
Key resistance for BNF: 24600-24725
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
9930 area for further rally towards 9980-10030 & 10095/10115-10160 area in
the short term (under bullish case scenario).
On the flip side, sustaining below 9900 area, NF may fall
towards 9860-9825 & 9775/9760-9705 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24525 area for further rally
towards 24600-24725 & 24900-25025 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24475 area, BNF may fall
towards 24375-24275 & 24090-23950/23850 area in the near term (under bear
case scenario).
Nifty Fut (Aug) today closed
around 9907, soared by almost 91 points (+0.93%) after making an opening
session low of 9778 and closing minutes high of 9910. The Indian market surged today
soon after positive strong opening of EU market tracking a Reuters report that
Draghi may not discuss anything about the proposed ECB QE tapering from Jan’18
in the forthcoming Jackson Hall Symposium; ECB may discuss it after at Sep-Nov’17
meet.
This trial balloon by ECB coupled
with recent spate of soft EZ economic data and NK’s backs off its Guam missile
rhetoric & upbeat US retail sales yesterday has made the EURUSD lower;
subsequently EU/global stocks soared, boosting the Indian market sentiment
too!!
In addition of ECB QE tonic, Indian
market also get some strength on Govt’s talk of small reforms like extension of
Sunset clauses for the manufacturing cos in the hilly states in lieu of
exemption of excise duties (under GST) till March’27 and SEBI nod for the lenders
(banks) for buying stakes in the distressed (indebted) cos without making an
open offer.
Indian market today opened around
9829 in positive territory, but soon after opening fall to the day low of 9778
after a selling spree, may be on concern for further war by the Govt on black
money (Shell cos) coupled with some disturbing news from various India-China
border/LOC areas.
Indian market was closed yesterday due to the Independence day
holiday, but SGX-Nifty yesterday made a high of 9850 in the early Asian
session, tracking upbeat global cues induced by NK’s dialing back of Guam
missile attack rhetoric; but it fall soon towards 9800 after NAMO’s I-day
speech amid concerns of renewed war on black money, corruption & Shell cos
etc.
Overall, it seems from the I-day speech of NAMO that, Govt/BJP
is preparing for the ground work of general election to be held at either late
2018 or early 2019 and for that it will make the issue of “corruption fighting
for the benefit of poor” to mask some other real & important issues like
inclusive economic growth, employment, sub-standard qualities’ of free public
education & healthcare system in the country compared to its global peers.
Higher trajectory of Indian inflation & subdued trade data
may be also worrisome apart from muted Q1FY18 earnings. Also, yesterday’s
incident of a small skirmish between Indian & Chinese army at Ladakh LOC
may keep the Indian market in stress as border standoff between the two
countries ranging from Sikkim to Ladakh is getting serious coupled with ongoing
geo-political tensions at Pak LOC.
Looking ahead, Indian food inflation may be in higher trajectory
because of uneven distribution of monsoon across the country, excessive floods
in different parts of the nation.
Meanwhile, RBI has
released its Aug policy meet minutes, which is also largely in line with
its hawkish cut stance and it seems that most of the MPC members are not in a
mood to cut further in 2017 amid hawkish stance on inflation and requirement of
further rate cut transmissions by the banks.
MPC is clearly concerned over weak private capex cycle &
stressed Indian corporates, ongoing farm loan waivers, subdued economic
activities, but hopeful that a strong farm sector growth because of good
monsoon this year may also boost rural consumption.
RBI may be quite confused about paradoxical economic activity
& subsequent FY-18 GDP projection and concerned about downside risks to
growth momentum of industry & services. As par RBI Dy Gov, an aggressive
rate cuts may also fuel asset price inflation. RBI Gov (Patel) is clearly worried
about lower rate cut transmissions by the banks and sees scope for more
administered rate cuts for the effective bank lending rate.
As par RBI Dy Gov, a higher real rate of interest in India is
fine as rate cut transmissions process is not efficient and most of the MPC
members also see the present trajectory of lower inflation as transitory
(favourable base effects) and a change of stance from neutral to accommodative
or further reduction of policy rates may be seen as inconsistent and may also
undermine the RBI credibility.
RBI Dy Gov has also observed the terrible (weak) Q4FY17 GDP as a
result of stressed BS of banks & cos; i.e. due to legacy issues of twin BS
in India.
Overall, it seems from the RBI minutes that barring one, all the
other four MPC members are hawks and favoring for a neutral stance in the
months ahead. RBI may focus more on NPA resolution and PSBS recapitalization issues
going ahead to clean the Indian banking system.
Nifty was today supported by ITC (reports of further hikes in
cigarette prices coupled with foray into packaged agri products marketing), Tata
Motors, TECHM, BOB, TATA POWER, Sun Pharma, SBI & HDFC duo.
Nifty was dragged by RIL (huge fine imposed by the Govt for less
production of gas), Asian Paints, Yes Bank, INFY, Powergrid, LT, NTPC &
ONGC; overall, out of 50 stocks in Nifty, only 13 were closed in red today.
FMCG were upbeat today on hopes of some GST rate revision amid various anomalies.
Going forward, Indian market may be under stress as SEBI/Gov may
intensify its war on “Shell Cos” and unusual penny stocks activities for
alleged market manipulation & money laundering.
European
Market Is Also Upbeat Amid Plunge In EUR After Unexpected Walks Back Of Draghi’s
QE Talk At Jackson Hall Symposium:
European market is also trading in deep green on Draghi’s flip-flops as he is
not expected to deliver any fresh policy talks (QE) at the Jackson Hole
Symposium; EUR is plunging and a weak EUR is good for EU economy & stocks,
being heavily export driven.
EU market is also being supported by miners today on upbeat base
metals & Copper as commodity currencies are also getting strength following
NK’s dialing back of Guam missile attack rhetoric and no fresh ICBM test in its
Liberation day yesterday; but some telecom & insurer stocks are dragging
the market, while automobiles are helping on some China M&A buzz over Fiat
Chrysler coupled with JV of self-driving cars technology with BMW.
Also mixed earnings & outlook of developers and
beer/beverage makers are also affecting the EU market on both sides; EURO
Stoxx-50 is now up by around 1% with similar gains in DAX, FTSE & CAC.
A better than expected EZ GDP at 2.2% for Q2 (YOY) may be also
boosting the overall EU economic optimism, although it may be positive for the
EUR. An upbeat GDP across the EZ coupled with optimistic growth projection of
China by IMF may be also helping the metals today.
Globally, Asian market
today was trading mixed tracking muted global cues
ahead of FOMC minutes and ongoing US political jitters coupled with the planned
US-SK joint military exercise on 21st Aug. But, SK president’s
comments that US need to take consent from his administration before launching
any pre-emptive attack on NK may have also eased the geo-political tensions
further today.
Overnight, US market
(DJ-30/US-30) also closed almost
unchanged around 21999 (+0.02%) on concerns of another Fed hike in Dec’17 after
a blockbuster US retail sales coupled with upbeat Empire State Mfg Index &
US inventories despite NK backs off from its missile game.; both USD & US
bond yields were higher yesterday.
Overall, yesterday’s upbeat US retail sales may be also termed
as seasonal amid ongoing summer driving season (holidays) and may be also
supported by surging US household debts & credit card delinquencies,
although it may be also backed by decent wage growth.
Market may be also confused that despite surging US retail
sales, US retailers’ earnings or guidance are not so upbeat and coupled with
that ongoing political jitters at WH (Trump) on the VG racist incident issues
may have also affected the overall US market sentiment.
Although, Trump has signed a deregulation bill on his executive
power for faster approval of large infra projects from the environment logjam,
it may take still 2 years in US for such infra projects approval in comparison
to earlier 10 years, which is still a lengthy process. Yesterday’s Trump
presser about this infra de-regulation bill has also turned into another
political controversy on questions about the VG incident.
Trump may be a smart businessman or a deal maker, but lacks
political maturity to lead the WH and other important legislations smoothly and
his handling of the current VG racist incident may be also very poor which is
reflecting in his dwindling approval rate, now at lowest since his election day
win.
SPX-500 (Fut) is now trading around 2465, down by around 0.08% and looking
ahead, it has to sustain above 2475-2480 area for 2495-2505 zone; otherwise it
may come down.
Elsewhere, Australia
(ASX-200) closed around 5785, up by almost 0.50% despite AUDUSD rebounds
slightly amid mixed AU wage data; mixed commodities (muted metals/copper,
slightly higher iron ore & oil) may be overall positive for the AU market
today coupled with upbeat banks & financials.
Japan(Nikkei-225) closed flat around 19729 (-0.12%) tracking almost unchanged
USDJPY trading around 110.75; being helped by Tech shares, but may be under
pressure eyeing next week’s scheduled SK-US joint military exercise in the NK
troubled Korean peninsula.
China (SSE) was hovering around 3240, down by almost 0.30% ahead of
earnings deluge and pressure on some large cap cos coupled with IMF concern on
China’s huge debt, which may hit 300% of the GDP in the months ahead. Today
PBOC fixed USDCNY a little higher at 6.6779 vs 6.6689 yesterday with a net OMO
injection of 180 bln Yuan after many days.
China is now the top foreign holder of US debts (TSY) at $1.15
tln followed closely by Japan at $1.09 tln as on June’17; together these two
countries hold above 33% of total US TSY bonds. China market is also under
pressure due to ongoing NK tensions & Trump rhetoric of sanctions due to
the IR & other trade protection issues, despite IMF upgraded its GDP to
6.4% from 6% earlier by 2020.
But IMF also warned about dangerous trajectory of growing China
debt coupled with increasing risk of disruptive adjustment (deleveraging),
which may also result in significant slowdown in GDP and also advised for an
orderly process of ongoing deleveraging effort.
On the other side, China securities regulator (CSRC) also sees a
rising China stock market as a successful reform process by the Govt (stable
growth coupled with supply-side structural reform) ahead of its party congress.
Hong-Kong (HKG-33) was trading around 27395, up by almost 0.90% on growth optimism
about some China based cos in banking, casino gambling, developers &
internet/tech stocks and basically driving the regional market sentiment
coupled with a relatively strong EU market opening amid a higher USD &
lower EUR.
Meanwhile, Crude Oil (WTI)
is hovering around 47.80, up by almost 0.50% on surprised drawdown report of
Crude but higher gasoline storage (mixed private API report); all eyes of the
Oil traders are now on the official EIA report later in the US session.
SGX-NF
BNF
EURUSD
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