Market Mantra: 11/10/2017 (09:00)
SGX-NF: 10065 (+29)
For the Day:
Key support for NF: 10045/10005-9950
Key resistance for NF: 10085-10105/10125
Key support for BNF: 24150-24050
Key resistance for BNF: 24400-24650
Hints for positional trading:
Technicals indicate that, NF has to sustain over 10105-10125
area for further rally towards 10165-10205 & 10275-10305 area in the short
term (under bullish case scenario).
On the flip side, sustaining below 10085 area, NF may fall
towards 10045-10005 & 9950-9910 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24400 area for further rally
towards 24550-24650 & 24750- 24850 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 24350 area, BNF may fall
towards 24150-24050 & 23750-23650 area in the near term (under bear case
scenario).
As par early SGX indication, Nifty Fut (Oct) may open around
10065, gap-up by almost 29 points tracking mixed
global cues and IMF’s better than expected projection of GDP for India in 2017-18.
Asia-Pacific market has got some boost as USDJPY recovered from yesterday’s low of
112 to almost 112.45 now on a Global Times (China) report that NK may give up
its Nuke ambition in lieu of guarantee of “security”; i.e. if NK got some guarantee
about no US attack, it can give up its Nuke weapons. A higher USD is generally
good for export heavy Asian market.
Earlier, USD dropped due to a report that NK has an ICBM of 3000
km, which is capable of hitting US territory after some “modifications”.
USD was also under some pressure yesterday on dwindling prospect
of passage of the US tax reform bill this year on increasing feud between Trump
& some of his own RNC senators. Trump will now modify some of his tax cut
plans to reintroduce it; most probably it may be some adjustments in low/middle
income group tax cut plans.
USD & EUR got further boost yesterday from Catalan Prez’s confused
speeches about “delayed declaration of independence” from Spain and an indirect
offer for negotiations with both Spanish & EU authorities (bargain
hunting). But, Spanish authorities quickly rejected the speech of Catalan Prez,
terming it as an indirect declaration of independence, which is not acceptable.
Catalan episode turned into further political uncertainty after
Catalan Prez signed an independence declaration document just one hour after
his “historic” speech; as par latest report, Spain has convened an emergency
cabinet/parliament all party meeting to deal with the Catalan crisis.
Thus, the Catalan political uncertainty may continue for political
compulsion of both sides and it may be also a major hangover not only for
Spain, but also for the overall EU market & EUR at least for the medium
term and that may also help Draghi to normalize the ECB monetary policy &
go for QE tapering without worrying too much for the EUR strength.
USD got some risk-off mode early in the Asian session today
after news that US has flied 2 bomber planes along with 4 other SK & JP
Jets in a show of strength over the Korean peninsula; but it recovered on hopes
of a hawkish FOMC minutes later today coupled with favorable yield
differential.
As of now, USD may be already discounted to a great extent for
Dec’17 rate hike, but Fed dot-plots for 2018 may looks uncertain on subdued US inflation
& mixed economic data coupled with uncertainty of Fed leadership & US
politics and fiscal stimulus.
Overnight, US market closed in positive in another milestone over Q3 earnings
optimism despite faded hopes for tax cut in 2017 and ongoing saber-rattling
between NK & US; DJ-30 edged up by almost 0.31%, S&P-500 closed 0.23%
higher around 2551, while NQ-100 lost 0.01% (almost unchanged). Yesterday, US
market was helped by Wall-Mart on upbeat guidance along with the entire
consumer staples sector, energies (higher oil), airlines and healthcare, while
dragged by mixed techs.
US stock future (SPX-500) is now trading around 2550, almost unchanged before EU market
opening; apart from earnings, NK & Catalan issues, FOMC minutes about Fed’s
thinking for Dec’17 rate hikes, market may also focus on deluge of Fed talks
and any reference to the BS tapering issue, which was scheduled to start from 1st
Oct; if there is no adverse effect, then a Dec’17 rate hike is almost certain.
Back to home, Indian
market (Nifty Fut/India-50) is now consolidating around 10080, up by almost
0.45% after opening around 0.16% higher tracking mixed global cues and better
than expected IMF projection for FY: 18-19 GDP coupled with earnings optimism
for Q2FY18.
Although, IMF has sharply downgraded Indian GDP for FY:18 to
6.7% from earlier projection of 7.2% on account of lingering effect of DeMo
& GST disruptions, it may be still above official RBI projection or general
market consensus after terrible Q1 GDP at 5.7%; RBI has projected real GVA at
6.75% for FY:18.
For CY: 2017-2018, IMF has projected China’s GDP as 6.8% vs 6.7%
(prior) and 6.5% vs 6.4% (prior); in that scenario, Indian GDP may not be far
behind China, if IMF projection came true; in fact for FY-19, IMF has projected
Indian GDP at 7.4%, which if come true, then India can outstrip China GDP
growth rate by 2018.
Although, such IMF projection has no effect on the overall
global market, considering its poor forecast history, for records: IMF growth
projection
·
3.6% global GDP vs 3.5%
in July projection (2017)
·
3.7% global GDP vs 3.6%
in July projection (2018)
·
US growth at 2.2% vs 2.1%
prior (2017)
·
US growth at 2.3% vs 2.1%
prior (2018)
·
China growth at 6.8% vs
6.7% prior (2017)
·
China growth at 6.5% vs
6.4% prior (2018)
·
EZ GDP 2.1% from 1.9%
prior (2017)
·
EZ GDP 1.9% vs 1.7% prior
(2018)
·
Japan GDP 1.5% vs 1.3%
prior (2017)
·
Japan GDP 0.7% vs 0.6%
(2018)
Basically, apart from US, India & UK, IMF has upgraded GDP
growth for all the other major economies.
IMF has downgraded US for political risk & poor visibility of
Trumponomics (tax reform & fiscal/infra stimulus); UK for Brexit &
political uncertainty; India for DeMo & GST disruptions. But IMF has also
kept hopes on India’s ongoing structural reform and has called for necessary reform
in land acquisition, labour laws.
Apart from growth slowdown, NPA is another major problem for the
Indian economy. As par latest RBI report, almost $146 bln or around 13% of
total bank loans were stressed as on June’17. The figure may be well above 15%
by now and as par some earlier reports, almost 25% of India’s bank loans may be
soured. This may be an indication that although the reorganization process is
now fairly good, the resolution process may be quite slow and in some cases
unviable too!!
All eyes now will be on Q2FY18 earnings trajectory along with
the maiden meeting of PM’s economic advisory panel (PM-EAC) for any viable plan
or fiscal stimulus to dig out the Indian economy out of its deepest slump since
2014.
SGX-NF
SPX-500
No comments:
Post a Comment