*Market Wrap* <https://www.iforex.in/news>: 24/01/2018 (17:00)
NSE-NF (Jan):11082 (-3; -0.03%)
(NS: 11086; TTM Q2FY18 EPS: 391 TTM Q2FY18 PE: 28.35; Abv 2-SD of 25;
Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):27445 (+59; +0.22%)
(BNS: 27399; TTM Q2FY18 EPS: 867; TTM Q2FY18 PE: 31.60; Abv 3-SD of 30;
Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
*For 25/01/2018: Jan-Fut/spot*
*Key support for NF: 11075/11030-10975/10935*
*Key resistance for NF: 11135/11175-11215/11260*
*Key support for BNF: 27300/27050-26800/26600*
*Key resistance for BNF: 27600/27825-28075/28405*
*Trading Idea (Positional):*
*Technically,*Nifty Fut-Jan (NF) has to sustain over 11135 area for
further rally towards 11175-11215 & 11260-11315 zone in the short term
(under bullish case scenario).
*On the flip side,*sustaining below 11115 area, NF may fall towards
11075/11030-10975/10935 & 10890-10825 zone in the short term (under bear
case scenario).
*Technically,*Bank Nifty-Fut (BNF) has to sustain over 27600 area for
further rally towards 27750-27825 & 28075-28405 zone in the near term
(under bullish case scenario).
*On the flip side,*sustaining below 27550-27450 area, BNF may fall
towards 27300-27050 & 26800-26600 area in the near term (under bear case
scenario).
Indian market
<https://www.iforex.in/analysis/nifty-closed-almost-flat-mixed-global-cues-psbs-recaps-optimism-48303>
(Nifty Fut-Jan/India-50) today (24^th Jan) closed around 11082, almost
unchanged after making an opening session low of 11043 and late hours
high of 11115 and made another record high in Nifty spot at 11110 in
line with global euphoria & Davos optimism. But broad based selling in
mid/small caps for MF portfolio restructuring may have also affected the
overall market sentiment coupled with extremely stretched valuation and
thus we have a range bound day in most of the trading session.
In the last hour, reports of PSBS recaps roadmaps by the government
(announced after market hours) has boosted the public sector banks
(PSBS); pharma & techs was also in upbeat mood today on renewed optimism
about the sector & some bargain hunting as defensive bets (market at
record high).
Indian market today opened almost flat on mixed global cues
<https://www.iforex.in/news/europe-may-trade-lower-mixed-global-cues-higher-eur-48245>
and lower USD amid looming trade wars between US & China, bad for export
heavy Asian as well as EU market and soon it gained some momentum on
PSBS, pharma & techs; PSBS were upbeat on hopes of a speedy resolution
of corporate NPA & recaps.
Apart from ongoing Davos optimism, overall sentiment was further
supported by positive commentary from Moody’s: “Sees India’s FY18 Fiscal
Deficit at 3.5% Of GDP; Believe India's Commitment To Fiscal
Consolidation Remains & will Take Time For Impact Of India Govt Reforms
To Be Seen; Sees India GDP Growing By 6.7% In FY18, 7.5% In FY19”.
Moody’s: “India's Growth Potential Much Higher Than Baa-Rated Peers;
Expect India's External Vulnerable To Remain Low; GST Rollout Disruption
To Fade Over Next Few Quarters”.
*Govt has announced partial recaps for the PSBS:*
After market hours, government (Govt) announced recaps roadmaps for the
PSBS at around 0.88 tln through a special recap bonds in a mix of
non-PCA & PCA PSBS with various caveats as expected; the aim is to
basically bail out the weak PSBS first with partial recaps and skewed
towards meeting regulatory requirement.
Govt: In Oct 2017, had announced recapitalization plan for PSU banks to
the extent of Rs 2.1 tln. Recapitalization will be spread over FY18 &
FY19; already moved supplement grant in parliament for FY18 infusion;
Govt has the prime responsibility of keeping the PSU banks in good
health; Inherited a major problem; had been involved in finding
solutions to the problem; recap will ensure no state-run bank will fail.
Govt: Have to create an institutional mechanism to make sure past is not
repeated. Various steps to be taken to ensure that governance of banks
follow the highest standard; Govt has prepared a plan for this;
Induction of Capital & the Basis Of Infusion Is The 1st Exercise. Govt
Has Prepared a Plan for Governance for PSU Banks; the economy has gained
traction in terms of economic growth, higher rating, and credit offtake.
Govt promised to give capital on the basis of performance, merit.
Govt: Depositors' money in PSBs is safe; no PSB will fail; Regulatory
capital of all PSBs is being maintained by Govt.
Govt: No easy money; Recap dependent on Performance & Reforms;
EASE-Enhanced Access & Service Excellence. Repositioning PSBs- banks
being given capital based on:-1.Customer responsiveness 2.Responsible
banking; 3.Credit offtake through technology & cleanliness 4.MSME
friendly banks 5. Financialinclusion 6.Digitisation deepening.
Govt: proposed that every banks shall have min 10% exposure in a
consortium borrower. All loans above Rs 250 cr will undergo special
monitoring; breach of any loan covenant will be shared with entire
lending consortium as a red flag.
Govt: App developed to map Business Correspondents , PSBs in every area.
Every PSB to promote apps for easy opening of accounts, doorstep banking.
Govt: All banks should not get into all activities, must concentrate on
core strengths. Each bank to adopt a policy in accordance with their
core strengths. PSU banks need to identify non-core assets to monetize.
Govt: Bank Not On Corrective Plan (NON-PCA) Getting Funds Mainly To Aid
Growth; Banks On Corrective Plan (PCA) Getting Funds To Meet Regulatory
Needs.
As par report: Post capital infusion, the Tier-I ratios of 20 PSU banks
will be higher than 9%. UCO Bank, IDBI Bank and Bank of Maharashtra will
benefit the the most with the biggest increase in their Tier-I ratios.
Govt: Recap Amount to Strengthen PSBs, Enhance Lending Capacity. Timing
Of PSB Recap Could Not Have Been Better. Bank To Turnaround In FY19;
Strategies Have Started Yielding Results.
Govt: No Proposal To Hike FDI In Banking; Bank Recap Will Increase
Banks' Capacity To Lend By Rs 5 tln. Independent Agencies to Evaluate,
Rank PSU Banks Annually On Reforms.
Govt: PCA Banks Gets Rs 0.53 tln; IDBI Bank Gets Highest Fund Infusion.
Rs 0.88 tln; For 20 PSU Bank Recap. Govt Of India Infuses $13.84 Bn In
20 PSU Banks. Bank Recap Bonds Will Be Non-Tradable. PSU Bank Recap
Bonds to Be Issued In 6 Slots.
Govt: Frontloading Bank Recap This FY; Bank Recap to Be Worth More Than
Rs 1.00 tln This FY; PSBs Need to Give Out Loans Responsibly so as to
Maintain Low NPAs.
SBI: Recap Amount For SBI More Or Less On Expected Lines. Adequately
Capitalized Currently, Recap Amount To Enchance Cap Further. Rs 8,800 Cr
Recap Amount To Enhance Capital Base By 40 bps. PSU Bank Recap a
Reiteration Of Govt's Commitment Towards PSBs.
Govt: Economy Has Gained Traction In Terms Of Credit Offtake, Corporate
Earnings. Cleaning Up Of PSU Banks' Book Led To Revised Ratings, Higher
Credit Offtake. Recap Based On Performance and Potential Of Each Bank.
Thus, Govt want PSBS to start corporate lending in a big way to support
private capex with an eye on quality & qualified corporate borrowers;
but considering the ongoing stress for most of the corporate groups and
certain other structural issues, that may be very difficult at this
point of time.
Today Nifty was supported mostly by SBI, HDFC, TCS, ITC, Adani Ports,
Bajaj Fin, Infy, HDFC Bank, HCL Tech & Yes Bank by around 60 points
altogether (top ten contributors).
Nifty was dragged by ICICI Bank, RIL, Tata Motors, Bharti Airtel, Axis
Bank, Eicher Motors, VEDL, M&M, Tata Steel and L&T by around 66 points
cumulatively (top ten draggers).
Overall, today Indian market was helped by PSBS, mixed private banks,
financials, FMCG, techs, pharma, while dragged by automakers, media,
metals, reality, energies, infra & consumer staples.
EURUSD View
<https://www.iforex.in/news/eususd-jumped-mixed-eu-economic-data-dovish-jawboning-mnuchin-48253>:
BTCUSD View
<https://www.iforex.in/news/bitcoin-jumped-hopes-south-korean-trading-under-proper-regulation-48277>:
USDJPY View
<https://www.iforex.in/news/usdjpy-tumbled-rosss-direct-china-threat-comments-48297>:
GBPUSD View
<https://www.iforex.in/news/gbpusd-soared-blockbuster-uk-job-report-eyeing-144-levels-amid-plunge-greenback-48267>:
Oil View
<https://www.iforex.in/news/oil-jumped-mixed-inventories-report-unable-hold-65-levels-48283>:
<https://3.bp.blogspot.com/-JqKgd3D_fuc/WmlS7mY34QI/AAAAAAAAOoA/BzsRqA3G8cU4kCKOohDXiEglu--Qkae2gCLcBGAs/s1600/SGX-NF-PATTERN-24-01-2018.png>
SGX-NF
<https://3.bp.blogspot.com/-fOUh4KitnjE/WmlS-9MBcxI/AAAAAAAAOoE/0yIbc6qmunk50_mY5v59C_I3qf0Bic63wCLcBGAs/s1600/BNF-PATTERN-24-01-2018.png>
BNF
<https://1.bp.blogspot.com/-M4BoCyyS_6U/WmlTDlWO3DI/AAAAAAAAOoI/v5iQtP-eZHopisIERo1PwBxzOQh4XAyIQCLcBGAs/s1600/USDJPY-PATTERN-24-01-2018.png>
USDJPY
--
Thanks & Regards,
Asis Ghosh
--
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