Market Mantra: 07/12/2017 (09:00)
SGX-NF: 10075 (+1)
For the Day: updated: 13:15
For 07/12/2017: Dec-Fut
Key support for NF: 10070/10050-10010/9970
Key resistance for NF:
10135/10155-10210/10245
Key support for BNF:
24750/24600-24400
Key resistance for BNF:
25300-25450/25700
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10210 area for further
rally towards 10245-10285 & 10350-10425 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 10195-10155 area, NF may fall towards 10070/10050-10010
& 9970-9910 zone in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25300 area for further
rally towards 25450-25700 & 25875-26050 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25250-25100 area, BNF may fall towards
24750-24600 & 24400-24100 area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Dec) may open around 10075, almost unchanged on mixed
Global/Asian Cues coupled with an expected hawkish hold by RBI yesterday.
USD edged higher on renewed optimism about US Tax reform after a
US Senator (Hatch) almost assured that the controversial AMT will be rolled
back in the final reconciled tax bill; overall market thinking is that the
sudden last minute inclusion of AMT in the Senate version may be a “mistake” as
a result of so much haste, but “you never know” and thus everything is still uncertain
until we see the final print. Also there may be intense US Govt shut down drama
on the weekend, which will affect USD sentiment going ahead.
USDJPY got some boost in the Asian session today after another
dose of dovish jawboning from BOJ’s Kuroda, although it may be cleverly
designed to manage market expectations of any backdoor QQE tapering ahead of
its policy meet on 21st Dec as BOJ is thinking about QQE tapering in
line with ECB & Fed. Kuroda was also upbeat on CPI and expects it to rise
moderately.
As par Kuroda: “BOJ will do whatever it takes to achieve
mandates; referring to both financial and price stability mandates; Exit from
QQE will be an important topic for BOJ's future communication on policy; BOJ
has the necessary tools to engineer a smooth exit from QQE; BOJ debating what
steps to take in what order to end easing policy; Talking any specifics of QQE
exit would end up being confusing now; Will communicate closely with markets on
monetary policy to stabilize expectations”.
Asia-Pacific market is also positive on higher USD except China,
which is down on continued zero net liquidity injection by PBOC coupled with “unusual
absence” of their “national plunge protection team” (Govt DII) and concerns of
further regulatory & liquidity tightening. Japan surged by 1.45% after
1.97% plunge yesterday on higher USD & bargain hunting; HK also stabilized
today (+0.20%) after 2.30% slump yesterday led by Techs.
China market was also under pressure on muted outlook by IMF
(stress test results on NPL) and Fitch, which predicted China’s 2018 GDP growth
at 6.4% vs 6.8% earlier. But PBOC has denounced the IMF stress test and
commented that it has taken several steps for deleveraging.
Although, Fitch has predicted also lower growth for India for
2018 (@6.7% vs 6.8% earlier), it forecasts the country as the fastest growing
APAC economy with an ongoing recovery from earlier disruptions of DeMo &
GST; India will be helped by huge RECAPS plan of PSBS by the Govt, which should
also reduce uncertainty and boost medium term outlook. For Japan, Fitch has
predicted upbeat growth at 1.5% for 2017, but slower rater of 1.3% in 2018.
Overall for APAC economy, Fitch thinks that: steady US monetary
tightening, gradual ending of monetary easing in EZ could put some pressure on
asset prices, capital flows, currencies; major central banks to keep key policy
rates low in 2018 given benign inflation environment; ongoing tensions on
Korean Peninsula could have disruptive spillovers on market sentiment, trade
relations, risk of an outright conflict is low; US administration's focus on
bilateral trade balances poses protectionism risks to its Asian trading
partners; sees global growth of 3.3% in 2018; That is up from 3.2% in 2017”.
Overnight US market closed mixed on some rebound in techs after
US Senator clarification on AMT issues; but it was dragged by banks, energies
following almost 3% fall in Oil after surge in gasoline stock piles in the US
inventory report yesterday (EIA). Market may be also concerned over dual effect
of US yield curve flattening & slump in Copper, both indicating a slower
US/global growth.
DJ-30 edged down by 0.16%, S&P-500 closed almost flat at
2629 (-0.01%), while NQ-100 rebounds by 0.21% on bargain hunting for battered
FANG/Tech stock, especially FB; but Citi Bank drags on concerns about adverse effect
of new US tax reform plan & repatriation narratives ($20 BLN).
US index future (SPX-500) is now trading around 2633, edged up
by 0.14% on positive Asian cues ahead of EU market opening.
EU market is also expected to open in green (+0.30%) on higher
USD, positive for export heavy EU market; EUR was under pressure yesterday on
dovish ECB talks, mixed EU economic data, German political tensions and plunge
in Steinhoff bond (accounting manipulation scandal), which ECB owes to a large
extent as a part of its corporate bond QE.
Back to home, Indian market
(Nifty Fut/India-50) is now trading around 10140, rebounds by almost 0.70%
tracking positive Asian cues and supported by bargain hunting/short covering
after RBI event; so far it made a session high of 10164 & low of 10079; all
eyes may be now on GJ election outcome.
Indian 10YGSEC yields fell slightly today (-0.20%); now hovering
around 7.03% against high of 7.07% mapped yesterday soon after RBI policy
announcements; USDINR-I is also trading almost flat around 64.68.
Now, RBI story is over and market will cover its short and
realign positions for the next big event of GJ election; although a NAMO
victory is almost a foregone conclusion, the margin of victory will matter most
as it will set the tone of 2019 general election; DeMo, GST blues, employment issues, slowing economy
and surging food inflation may be some of the headwinds for BJP in GJ this
time.
The ongoing “war of words” between NAMO & RAGA in the GJ
election and on different issues ranging from DeMo/GST to INC’s internal
election has made RAGA a “fighting matured leader” from earlier “prince” image
and thus 2019 election will be fiercely contested contrary to earlier
perception of virtual “no fight” as there was no “credible opposition leader”
on whom the nation can trust; but in political cycle, everything is possible
and “you never know”!!
SGX-NF
SPX-500
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