Monday 4 December 2017

Nifty Set To Consolidate Before “Santa Rally” On Mixed Global Cues & Renewed Hopes Of An Imminent Rate Cut by RBI (?)



Market Mantra: 04/12/2017 (09:00)

SGX-NF: 10165 (+21)

For the Day: updated:12:45

For 04/12/2017: Dec-Fut

Key support for NF: 10120/10090-10050/10015

Key resistance for NF: 10185-10225/10300

Key support for BNF: 25200/25100-24950/24700

Key resistance for BNF: 25600/25750-25875/26050

Trading Idea (Positional):

Technically, Nifty Fut-Dec (NF) has to sustain over 10225 area for further rally towards 10300-10350& 10425-10475 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10205-10185 area, NF may fall towards 10120-10090/10050 & 10015-9970 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF/BNS) has to sustain over 25600 area for further rally towards 25750-25875 & 26050-26200 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25550 area, BNF may fall towards 25400-25200 & 24950-24700 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Dec) may open around 10165, edged up on mixed global/Asian cues and hopes of an imminent rate cut by RBI day after tomorrow. 

US future is up by almost 0.56% on US tax reform optimism after Senate passed its version of the tax plan by 51-49 as highly expected (52-48) on the late weekend; one RNC rebellion voted against it along with all the DNC as par party line.

Overall reaction from Asian market for the US tax reform plan passage in the US Senate on late weekend is quite muted amid intense US political uncertainty and pressure on energies & techs to some extent despite higher USD.

Senate passage is just another forwarding step; now the most contentious issue is reconciliation of the two versions of tax plan put forward by US Senate & RNC/Congress and after that it will be ready for Trump’s signature to make it a law. 

Market is not sure about the ultimate fate of US corp tax cut structure & deficit financing issue; if corp tax cut is implemented from 2018 without any gradual effect, then it will be more positive for the US market, otherwise will be disappointed.

Market is also concerned about Flynn fiasco; although the present plea may be related to request for Russian help to veto out a Israel issue in the UN rather than any link to US election, market is worried that in future Flynn may disclose more serious information regarding Trump & his inner circle with Russian link.

Overnight on Friday weekend, US market closed in negative amid Flynn “shocker” and tax reform optimism; it plunged on reports that Trump has “directed Flynn to Talk to Russians during US election”; but later recovered after some inaccuracies of the news and passage of tax reform bill in the Senate following support of some rebellion RNC Senators.

DJ-30 edged down by almost 0.17%; S&P-500 also inched down by almost 0.20%, but well off the Flynn panic low of 2605 and closed around 2642, while NQ-100 dropped by almost 0.40%; banks & financials outperformed on hopes of more sectoral deregulation & tax cuts benefits, while industrials & techs/consumer discretionary (Amazon) plunged and energies helped on higher oil on Friday.

Health care was also upbeat amid news that Amazon may be interested for generic Drug makers (Mylan & Novartis). 

US index future (SPX-500) is now trading around 2659, surged by almost 0.57% on US tax reform optimism and hopes that Flynn or Muller’s investigation has no real evidence of Trump’s alleged links with Russia during US election episode.

Technically, for SPX-500, 2665-2685 may be now a big hurdle and 2615-2595 is the near term positional support as of now.

EU market is also expected to open in upbeat mood on US tax reform optimism and lower EUR (German political squabbling).

Back to home, Indian market (Nifty/India-50) is now trading around 10180, edged up by almost 0.25% after initial bout of volatility on concern of fiscal slippages & hopes of an imminent RBI cut day after tomorrow.

Although there were no hopes of a rate cut this time, some analysts/economists polled by BBG are assuming a rate cut of 0.25% by RBI considering slower inflation & growth (?). 

As par SBI, country’s largest lender, overall corporate loan growth is still muted around 6-8% although retail credit growth is quite strong.

Looking ahead, Banks will focus on quality of lending to corporates rather than quantity; but it may be very tough to find eligible & quality corporate borrowers willing to take loan from Indian banks at high rates rather than from oversees market for a much lower rate with a viable project in hand.



SGX-NF


SPX-500

No comments:

Post a Comment