*Market Wrap: 03/04/2017 (19:00)*
*NSE-NF (April): 9274 (+76 points; +0.83%)*
*NSE-BNF (April): 21585 (+97 points; +0.45%)*
*For 05/04/2017:*
*Key support for NF: 9235-9195*
*Key resistance for NF: 9310-9350*
*Key support for BNF: 21450-21350*
*Key resistance for BNF: 21675-21850*
*Time & Price action suggests that, Nifty Fut (Apr) has to sustain over
9310 area for further rally towards 9350-9395 & 9425-9465 and further
9505-9550 by tomorrow / in the short term (under bullish case scenario).*
*On the other side, sustaining below 9290 area, NF may fall towards
9235-9195 & 9150-9105 and further 9040-8900 area by tomorrow / in the
short term (under bear case scenario).*
*Similarly, BNF has to sustain over 21675 area for further rally towards
21750-21850 & 21950-22150 area by tomorrow / in the near term (under
bullish case scenario).*
*On the other side, sustaining below 21625-21550 area, BNF may fall
towards 21450-21350 & 21100-20900 zone by tomorrow / in the near term
(under bear case scenario).*
Nifty Fut (Apr) today closed around 9274, at day high after rallying 76
points and made an opening session low of 9203. Indian market today
opened in a positive tone, just above the previous record high of 9220
primarily on the strength of index heavyweight RIL, who also rallied
today by over 4% on the back of better than expected paid subscribers
additions for its telecom venture (R-Jio); although the company has
extended the free service for another four months, thus foregone for
around Rs.5000 cr of revenue from its 72 mln + paid subscribers!!
Further, domestic market sentiment got a boost after release of Markit
Mfg PMI for March, which came at pre-DeMo level of 52.5 against Feb
figure of 50.7. The marked improvement in Mfg PMI is at five months high
and accompanied by expansion in production & orders besides increasing
export activity. The underlying business confidence has also improved
significantly and overall PMI data may be also indicating that DeMo led
economic disruptions have almost eased in March with relatively muted
core inflationary pressure.
Also, global giant GS has recently predicted FY-17 & FY-18 Nifty target
around 9500 & 10200, citing recovery in earnings. GS is expecting an EPS
growth of Nifty for 12% & 15% for FY-17 & FY-18; i.e. around 415 & 477
Nifty EPS against FY-16 EPS of 370 & Q3FY17 TTM EPS of around 385.
Globally, all the major Mfg PMI data came upbeat from China to Italy,
except UK, which may be also an indication of improving global economic
outlook being reflationary in nature. Thus, the Indian market today
outperformed its global peers ahead of a holiday tomorrow on the back of
RIL, hopes of a double digit growth in Nifty EPS in FY-17 & 18 (against
average growth of around 7% for the last few years), speedy
implementation of GST by 1^st July and likely strong GDP growth in FY-18
(FM has pitched for a GDP growth of 7.2% & 7.8% in FY-17 & 18 on the
weekend).
Market may also watch keenly RBI Gov’s speech on 6^th Apr as it’s almost
certain now that RBI will be in hold, being in neutral mode. Being a
known inflation hawk, Patel & MPC may be hawkish (owlish) this time
considering overall macroeconomic scenario and a probability of a
deficient monsoon this year, which may also cause CPI and food & core
inflation to spike. An economy, growing around 7-8% may not need any
further repo rate cuts from the RBI to avoid overheating. RBI may focus
on NPA resolution mechanism in FY-18 rather than any incremental rate
cuts because it may be the most serious issue now for the fragile PSBS &
also for some of the old private banks (ICICI/Axis) and resolution of
India’s legacy issues of twin balance sheets may be also very vital for
the Govt in order to kick start corporate lending & private investments.
PSBS today underperformed because of lack of any big bang announcement
by the Govt for any “bad bank/super ARC” as was expecting by the market.
But, ICICI & Axis today also gave some support to the market, may be a
deleverage deal of Essar group, which owes a significant amount of NPA
to these private banks. But, the deal between Essar & Rosneft may again
came under some doubts as LIC is reportedly has some objections;
although Govt is itself keen to see the $20 bln deal to happen as it is
intended for s significant clean up of NPA for the co on the Indian
banking system.
IT counters were also under pressure today as Infy founder saga
continues for another big controversy apart from weak USDINR. But Pharma
counters today gave some support as concerns of US FDA may have been
eased to some extent after recent panic (various WL & import alert on
various companies).
India may be now one of few the EM(s), very stable politically & macro
economically and thus currently seeing a huge FPIS inflow besides
shifting of domestic flows in to the EQ market, especially after DeMo.
Thus, combination of power of liquidity and hopes of better prospects of
Indian economy & big bang reforms after huge election win of NAMO may be
some of the reasons for the strength of the market, beside a stable &
strong INR; now both Govt & Corporate needs to deliver in the coming
days as at around 9300-9500, valuations of Nifty may be extremely
stretched at current EPS of 385 (24.15-24.67).
Market may also watch any official IMD forecast about trajectory of
Indian monsoon this year, which may be announced shortly (this week). A
combination of a hawkish RBI & deficient monsoon this year may not be
good for the Indian market in the coming days, despite hopes of earnings
recovery & big bang reforms.
<https://1.bp.blogspot.com/-mghvq-55Abc/WOJeFQRV67I/AAAAAAAALLI/PfNmaLNy5VMLIheqQalE1xckIUycXlQ6ACLcB/s1600/SGX-NF-PATTERN-03-04-3017.png>
SGX-NF
<https://1.bp.blogspot.com/-5guN-DqlCuk/WOJeIARlzoI/AAAAAAAALLM/Lj3eSetcqSI4rnEIErQV-91ApQTpmcLGgCLcB/s1600/BNF-PATTERN-03-04-2017.png>
BNF
--
Thanks & Regards,
Asis Ghosh
--
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