Nifty Set To Open Almost Unchanged Amid Muted Global Cues On Geo-Political Concerns; Indian Market May Focus On Q2 Earnings & Macro Data

Market Mantra: 10/10/2017 (09:00)

SGX-NF: 10010 (-10)

For the Day: 

Key support for NF: 9980-9935/9915

Key resistance for NF: 10065/10085-10125

Key support for BNF: 24050-23750

Key resistance for BNF: 24400-24650

Hints for positional trading:

Technicals indicate that, NF has to sustain over 10065-10085 area for further rally towards 10125-10165 & 10205-10250 area in the short term (under bullish case scenario).

 

On the flip side, sustaining below 10045 area, NF may fall towards 9980-9935/9915 & 9880-9810 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 10010, almost unchanged (-10) amid muted global cues on renewed geo-political tensions involving NK & Catalan separation issues. Although, there are no visible signs of any NK ICBM test preparation till now, market may be apprehending some “big fire crackers” (ICBM) on NK’s party foundation day today till China’s party conference on 18^th Oct amid escalating rhetoric between NK & US.

Catalan leaders are set to declare an “independence” from Spain today despite some indirect offers for peace talk by the Catalan authorities amid anti-separation movement and threat of legal, economical & military action by the Spanish Govt. 

As overall Catalan referendum turnover was around 43% without participation from other areas of Spain, the bloody referendum may be treated as void & nil in the eyes of Spanish constitutional law and business leaders of Catalonia are also pressurizing the autonomous Govt to withdraw the separation movement immediately in a clear language. 

Although Catalonian separation movement is still simmering, it seems that those separation leaders are slowly backtracking and thus there is no real danger of separation immediately. But the overall reconciliation process between Catalonia & Spanish Govt may take significant time and thus there may be a certain elements for political uncertainty.

Overnight US market edged down in a holiday thinned trade on lack of any real triggers. USDJPY was also flat tracking renewed NK sabre-rattling, hurricane distorted NFP repot, doubt about passage of Trump’s tax reform bill amid “war of words” between him & another key senator and concerns about consumer spending & inflation ahead of key US retail sales & CPI data this week.

DJ-30 closed marginally lower (-13 points) around 22761 (-0.06%), while S&P-500 slipped around 5 points (-0.2%) to close at 2545 and NQ-100 lost around 10 points to close at 6580 (-0.2%); all the US indices were off their respective life time highs made during the day in early trading. 

Almost six out of eleven sectors in the S&P were in red, but pharma/healthcare stocks have dragged the US market most yesterday on concern of Amazon disruptions on buzz of an imminent entry into the sector. GE also dragged the market on several high profile exits under the new CEO, who is also under tremendous pressure from some activist investor to reboot the co.

But energy related stocks and Wall Mart (speedier product return process) has supported the market to some extent yesterday. US stock future (SPX-500) is now trading around 2545, almost unchanged before EU market opening.

EURUSD is now trading around 1.17715, up by 0.25% on Catalonian peace talks, buzz of a German coalition Govt under Merkel by next week, upbeat German IIP data and some hawkish scripts by ECB’s Lautenschlaeger yesterday signaling for a gradual ECB QE tapering from Jan’18 & subsequent monetary policy normalization. A strong EUR/EU bund yields may not be good for the EU & the global stock market.

Back to home, Indian market (Nifty Fut) is now trading around 10035, up by almost 0.20% after opening almost flat tracking muted global/Asian cues. Indian market may now focus on Q2 earnings and some macro data (CPI/IIP) this week. As par some reports, Govt may soon announce a fiscal stimulus package of around Rs.0.5 tln to dig out the economy from its biggest slumps in the last three years.

Although, Govt is trying its best to simplify the GST rules, ground realities may be quite different and it will take significant time to be a fully GST compliant economy for India, considering poor IT infra and high cost of compliances for the SMES/small traders.

A combination of higher USD, higher Oil and higher US bond yields may not be good for an import oriented economy like India, although it may be good for the export heavy Nifty earnings; 10YUSTSY bond yields is now hovering around 2.40% and if it breaks above 2.60% by Dec’17 on dual QT by Fed, it may cause huge outflows from EM, including India.

SGX-NF