Market Wrap: 09/02/2018 (17:00)
NSE-NF (Feb):10485 (-87; -0.83%)
(NS: 10455; Q2FY18 EPS: 391; Q2FY18 PE: 26.74; Abv
2-SD of 25; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):25530 (-412; -1.59%)
(BNS: 25921; Q2FY18 EPS: 867; Q2FY18 PE: 29.90; Abv
3-SD of 30; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 12/02/2018: Feb-Fut (Key Technical Levels)
Updated: 07:40 (SGX-NF: 10480); -5 points
(Flat on mixed global cues/last hour recovery in US market)
Expected BNF opening: 25530 (almost flat)
Support for NF: 10430/10370-10290/10240
Resistance for NF: 10515/10575-10625/10700
Support for BNF: 25400/25250-25000/24800
Resistance for BNF: 25700/25950-26050/26250
Trading Idea (Positional):
Technically, Nifty
Fut-Jan (NF) has to sustain over 10515 area for further rally towards 10575-10625
& 10700-10755 zone in the short term (under bullish case scenario).
On the flip
side, sustaining below 10495, NF may fall towards 10430-10370 & 10290-10240
zone in the short term (under bear case scenario).
Technically, Bank
Nifty-Fut (BNF) has to sustain over 25700 area for further rally towards 25950-26050
& 26250-26550 zone in the near term (under bullish case scenario).
On the flip side, sustaining
below 25650 area, BNF may fall towards 25400-25250 & 25000-24800 area in
the near term (under bear case scenario).
Indian market (Nifty Fut-Feb/India-50) today (9th
Feb) closed around 10485, slumped by almost 87 points
(-0.83%) on negative global cues; it made an opening minutes low of 10375 and
closing session high of 10495 amid concern of higher & attractive global/US
bond yields, which may induce fund outflows from Asian EM (emerging markets) like
India.
Asia-Pacific market slumped by 1.67% on Friday (9th
Feb) in MSCI-Asia Pacific Index (APC) to 170.54 on overnight bloodbath on US
market coupled with rising global bond yields and concern of China Yuan
devaluation & PBOC tightening. Overall, for the week, MSCI-APC tumbled by
almost 6.5% on terrible US cues on rising borrowing costs and renewed China
jitters. It seems that narrative of global goldilocks euphoria has suddenly
changed into dysphoria.
The sudden surge in long term US bond yields
(10/30Y) may push up overall global funding costs, which in turn could cause
significant outflow from the APC market, if 10YUSDTSY yields jumps above 3%. USD
is also becoming weak day by day, which is negative for export heavy Asian
markets. But at the same time strong Asian currencies may be also a reason for
the FPIS to stick with their APC holdings.
US cues were terrible on renewed surge in bond
yields after another spate of soft auction in 30YUSTSY yesterday coupled with
surge in VIX. As a result, US stocks plunged in last hour of trade on concern
that higher borrowing costs will drag the economic growth. USD also fell on
risk-aversion moves. Overall sentiment may have also affected after Fed’s
Dudley seemed unfazed about market turmoil and compared it to “small potatoes”.
Apart from negative global cues, worries about RBI
divergence in banking NPA, new accounting norms, RBI insistence to link bank’s
base rate with MCLR (marginal cost of funds based lending rate), hawkish hold
stance by RBI may have also affected the overall Indian market sentiment on
Friday.
But market sentiment was also being supported by
the perception that despite quite hawkish on inflation, RBI will not raise
rates in the immediate future and coupled with that some fall in oil allayed
some concern on fiscal deficit front and subsequently Indian benchmark 10YGSEC
bond yield dropped below 7.50% from recent high of 7.66%, which has also helped
the market.
After market hours, Indian market regulator SEBI
virtually banned SGX-Nifty (Singapore exchange) primarily on concern of huge
open interest (OI) build up in the Nifty Future. The move may be seen as
anti-globalization and against ease of doing business with India & may not
amuse FIIs as overall taxation & regulatory burden with Indian capital
market is significant, especially after imposition of LTCGT (long term capital
gain tax).
Market may
be also worried about health of Indian banks:
Indian market may be also worried about impact of
higher bond yields (i.e. lower bond prices & MTM loss) & RBI divergence
(i.e. higher provisioning) on bottom-line of the banks, especially PSBS and
also some blue chips private banks. Friday’s report card from SBI and few day
ago by GDFC bank is indicating that more “deep surgeries” may be required by
RBI to unearth the hidden bad loans (NPA/NPL) from the banking system, the
ratio of which is now amongst the highest in the world (NPA/total loans).
Nifty was helped mostly by Tata Steel, HCL Tech,
VEDL, Cipla, Asian Paints, HUL, Lupin, DRL, Gail & Coal India by almost 16
points altogether.
Nifty was dragged mostly by HDFC Bank, HDFC, Infy,
ICICI Bank, IOC, ITC, RIL, L&T, Yes Bank & Axis Bank by around 81
points cumulatively.
Overall, Indian market was helped by metals,
reality, power, consumer durables to some extent, while dragged by banks &
financials, mixed FMCG & techs, media, pharma, consumption, infra,
energies, auto makers, capital goods.
SGX-NF
BNF
SPX-500
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