Market Wrap: 18/07/2017 (17:00)
NSE-NF (July): 9852 (-81; -0.81%) (TTM PE: 24.88; Near 2 SD of 25; Avg
PE: 20; TTM EPS: 395; NS: 9827)
NSE-BNF (July): 24069 (+32; +0.13%) (TTM PE: 30.21; Near 3 SD of 30; Avg
PE: 20 TTM EPS: 795; BNS: 24022)
For 19/07/2017:
*Key support for NF: 9810-9715*
*Key resistance for NF: 9875-9960 & 9985-10005*
*Key support for BNF: 24000-23850*
*Key resistance for BNF: 24250-24350*
*Time & Price action suggests that, NF has to sustain over 10005 area
for further rally towards 10050-10115 & 10195-10250 in the short term
(under bullish case scenario).*
*On the flip side, sustaining below 9985-9960 area, NF may fall towards
9875-9810 & 9770- 9715/9670 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 24250 area for further rally towards
24350-24500 & 24700-24875 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 24200-24150 area, BNF may fall
towards 24000-23850 & 23600-23450 area in the near term (under bear case
scenario).*
Nifty Fut (July) today closed around 9852, dragged by almost 0.81% after
making an opening session high of 9905 and late day low of 9832. Indian
market today opened around 9873, almost 60 points gap down tracking
Govt’s GST flip-flops on Cigarettes (ITC) and subdued global cues after
US healthcare bill got further delayed and EUR got strength ahead of ECB
meet day after tomorrow.
After opening weak, Indian market today covered a bit as some short
covering/value buying emerges at lower levels and was also being helped
by the Banks to some extent after yesterday’s favourable HC verdict on
the Essar Steel IBC/NPA cases.
But in the closing session, Banks were also came under pressure on some
reports that they need an amount of around Rs.18000 cr ($8 bln) as extra
provision for the NPA/IBC cases as par latest RBI directives.Also, there
is some strong buzz about an imminent consolidation (merger) among
strong & weak PSBS.
Q1FY18 report cards from cement majors although looked apparently good
and as par or slightly above market estimates, fine print may not be so
rosy with tepid EBITDA margin and too much dependent on Govt’s capex
(affordable housing, infra, rural spending etc) and thus cement majors
were also succumbed to the bear pressure and dragged the market along
with Banks in the closing session.
Today, Indian market sentiment have also affected by Govt’s flip flops
on effective GST rate on Cigarettes.
Today Nifty was dragged most by ITC & RIL; ITC was down by nearly 15% at
the opening, but later recovered to some extent and closed down by
12.50%; there was some reports that RIL was asked by the Govt to pay a
combined arbitration penalty of $3 bln along with Shell & ONGC over PMT
oil field dispute.
Apart from ITC & RIL, Nifty was pulled down by Auro Phrma, Idea, Gail,
SBI, BOB & Indusind Bank. But it was today supported by Eichermotor,
Asian Paints, Sun Pharma, HCL Tech, Axis Bank, ONGC & Tata Steel.
Looking at the chart, Nifty Fut (July) now need to stay above 9810 area;
otherwise expect more correction towards 9760 zone in the coming days.
Almost all the major Asian markets were in red today tracking subdued
global cues after US healthcare bill got further delayed and EURUSD get
some strength amid virtual death of “Trumpcare” ahead of ECB meet day
after tomorrow.
Overnight, US market (DJ-30) also closed almost flat (-0.04%) on mixed
earnings and lack of any meaningful cues; but some gains in utilities &
consumer stocks were substituted by declined in healthcare.
The present flip flops & repeated failures of US healthcare bill may be
significant in Trump’s ability to pass his agenda of other important
bills like tax reform & fiscal spending as there are growing oppositions
within his own party (RNC) and in that scenario, the whole narratives of
Trumponomics & Trumpflation trade may be in doubt.
Thus, Fed may be also in the sideline at least still Dec’17 and
consequently USD is getting weaker across the board and JPY, EUR is
getting stronger, pulling down the risk-on sentiment across the
Asia/global market.
Overall, a recent survey shows that although most of the Americans are
happy about their jobs & US economic prospect, almost 60% of them
disapprove Trump and his handlings of the US administration.
Elsewhere, Australia (ASX-200) was closed around 5682, down by almost
1.30% after jump in AUDUSD following surprised hawkish & upbeat comments
of RBA minutes, which has argued for a neutral nominal rate of 3.50%;
thus risking for another 2% hike by RBA in the quarters ahead.
Australian markets were also being affected by some big banks for the
last few days; looking ahead, 5580-5450 may be the nearest positional
support for the index (SPI/ASX-200).
Japan (Nikkei-225) also closed around 20000, down by almost 0.50% as Yen
is getting strength following weak US economic data on Friday and fall
in USD due to death of US healthcare bill; Nikkei is an export heavy
index. Japanese insurers are also in pressure as JGB bond yields fall on
expectations of a dovish script from BOJ day after tomorrow; immediate
support for the Nikkei-225 is is now around 19930 area.
Market may also apprehend that any hawkish rhetoric (?) from ECB on
Thursday may hurt USD more and subsequent strength in JPY may also
affect the JP stocks more. Also in that scenario, JP & EU bund yields
spread may widen more, making it more difficult for the BOJ to maintain
its dovish stance.
China (SSE) closed today consolidating around 3175, almost flat (-0.01%)
after yesterday’s sharp sell off on regulatory & financial tightening
concern by the Govt. Today, PBOC again injected a huge liquidity of 170
bln Yuan to stem the crisis.
The Chinese deleveraging story may be significant in the sense that be
it a black swan event or a Gray Rhino (a high probable, high impact
threats that people should see coming, but often don’t’), it may affect
the global reflation & asset bubbles directly or indirectly.
As a result of China’s credit boom, overseas investments in various
asset classes including real estate’s has grown in an abnormal rate and
any serious deleveraging effort by PBOC may also cause severe meltdown.
European market also came under pressure from the overnight Trump fade
and subsequent strength in EUR and slump in Auto major (Volkswagen)
after guidance warning and dragged the Indian market further. Stoxx-50
was down by almost 1%, dragged by techs & consumption stocks, but helped
by health care & utilities.
DAX was trading around 12412, almost down by 1.39%, dragged down by EUR
& telecom major Ericson on terrible earnings; DAX is also an export
heavy index; thus a strong EUR may be negative for it and looking ahead
12340-12300 may be a good support for DAX-30.
FTSE was almost flat around 7396 (-0.10%), but off the lows after fall
in GBP tracking lower than expected CPI today.
CAC-40 & MIB-40 were also down by around 0.90% & 0.59% respectively on
strength of EUR, which is now trading above 1.15 at multi months high on
soft US economic data and repeated failure to pass the US healthcare
bill, doubting about the whole narratives of Trumponomics itself.
<https://1.bp.blogspot.com/-nV9nIQT4GRE/WW5AO43lt9I/AAAAAAAAMZ4/hy56wu_r6q0QUnQ48YmrlXd-ZlADcKiSwCLcBGAs/s1600/SGX-NF-PATTERN-18-07-2017.png>
SGX-NF
<https://2.bp.blogspot.com/-5gjiW4D3I8E/WW5AakWDf8I/AAAAAAAAMZ8/wdI-6oWGTeg_yF9KtQn0UZuzBGL6uGBeQCLcBGAs/s1600/BNF-PATTERN-18-07-2017.png>
BNF
--
Thanks & Regards,
Asis Ghosh
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