*The Indian market
<https://www.iforex.in/analysis/nifty-surged-positive-global-cues-and-hopes-early-arrival-monsoon-52003>*(Nifty
Fut/India-50) closed around 10816 on Friday, surged by almost 0.85% on
positive global cues and hopes of a BJP win in the closely contested
Karnataka (KA) state election coupled with a Skymet prediction of an
early arrival of monsoon in Kerala this year.
On Friday, Indian market opened in a positive toneon upbeat global/US
cues after “Goldilocks” (soft) US inflation data on Thursday, which may
prompt Fed for the less hawkish approach (2 rate hikes in 2018 in lieu
of 3) in the months ahead.
But the Indian market was also cautious about surging oil and Karnataka
election, especially after the Malaysian political surprise and
anti-establishment sentiment there coupled with political populism and
pressure of a domestic audience. The higher cost of living and GST might
be one of the vital factors behind Malaysia’s political change and
subsequent plunge in the risk-on sentiment there, which has affected the
Indian market sentiment also on Thursday. It also seems that BJP is not
so much confident about a blockbuster win in Karnataka unlike in UP.
Thus Nifty (spot) slips from around 10786 to 10705, before closing
around 10717 on Thursday, skid by almost 0.23%. Following the same
trend, Nifty-Fut made a low of around 10737 from opening session high of
10777 and after that it soared to a high of 10827 n the last hour of
trade on Skymet’s early monsoon news and hopes of a BJP/NAMO win in
Karnataka, for which poll will be held on Saturday (12^th May) and exit
poll will be published in the evening of the same day. Eventually, Nifty
closed the week 1.77% higher against loss of 0.69% in the previous week.
Thus, on Monday there may be some volatility in the Indian market,
considering the outcome of the Saturday exit poll, although the actual
poll count and result will be announced on 15^th May. Wall Mart’s
acquisition of Flipkart may be also politically sentimental as it
involved innumerable small retailers and farmers.
Although small retailers may be unhappy over “backdoor” entry of Wall
Mart in India, farmers may be happy as Wall Mart may procure agri
products from them directly. In India, rural areas (farmers) have
significant swing capacity in a poll.
On Friday, India’s Skymet, a private weather forecasting agency has
predicted that monsoon may hit Kerala by 25^th May, almost 7-days in
advance from the usual 1^st June, although the onset of monsoon has no
connection with its performance or withdrawal. As par Skymet, India can
have a normal monsoon year even on the late arrival of monsoon, but they
don't see any delay in monsoon this year.
Subsequently, the Indian market surged sharply with FMCG, financials
were in the lead as a normal monsoon is good for the rural economy, agri
production and eventually on the inflation/bond yields.
But Indian 10Y bond yield was little moved today, closed the day almost
0.14% higher at 7.726% after making a high of 7.757% and a low of 7.701%
amid mixed news of higher oil, normal monsoon and the suspense of
Karnataka election. Similarly, USDINR-I closed almost flat around 67.44.
On Friday, Nifty was helped by ITC, HDFC, HDFC Bank, L&T, Asian Paints,
RIL (R-Jio optimism about post-paid services with lower tariffs), Kotak
Bank, ICICI Bank, Infy and HPCL, while it was dragged by Bharti Airtel,
Sun Pharma, Titan, Tata Motors, Hero Motors, NTPC, ONGC, Power Grid and
Bajaj Auto.
Overall on Friday, Indian market was helped by banks and financials,
mixed automobiles, FMCG, techs, MNC, media, metals (lower USD),
consumption and energies while dragged by pharma (Trump phobia about
drug pricing), reality, infra stocks.
*Global cues were positive during Indian market hours on Friday:*
*
*
US stock future (SPX-500) was up 0.23% at a new 1-1/2 month high on
expectations for the Fed to maintain their slow pace to interest rate
hikes after Thursday's CPI data came in below expectations. Energy
stocks were stronger with Jun WTI/crude oil was up 0.14% as Middle East
tensions simmer and as the market assesses how the renewed sanctions on
Iran will affect global crude supplies. Mining stocks and metal
producers are higher as well with higher metal prices. The 10Y UST yield
also held below 3%, another positive sign for equities. European stocks
were down 0.27%, weighed down by losses in healthcare stocks on a series
of product trial failures issues.
Asian stocks closed mixed amid lower USD: Japan +1.16%, Hong Kong
+1.02%, China -0.35%, Taiwan +0.92%, Australia -0.04%, Singapore +0.92%,
South Korea +0.38%, India +0.82% (Sensex). Asian stocks traded mostly
positive after sentiment rolled over from the US where soft CPI data
spurred hopes the Fed may have to slow the pace of hikes, while all
sectors in the S&P 500 finished in the green with gains led by tech,
telecoms, and pharma.
ASX-200 and Nikkei-225 were positive with earnings also a key driver of
price action and the top performing stocks in Japan spurred by corporate
updates including KDDI, Panasonic, and Suzuki. Japan's Nikkei stock
Index rallied to a 3-month high on hopes of North Korean Truce despite a
higher Yen on Friday. Reduced geopolitical concerns also aided Asian
equity markets with US President Trump and North Korean leader Kim set
to meet in Singapore on 12^thJune.
Hang Seng and Shanghai were mixed as Hong Kong sustained its
outperformance streak, while the mainland lagged after the PBOC
refrained from open market operations and widened the amount of
liquidity it drained for the week. PBOC skipped open market operations
for a net weekly drain of CNY 140B vs. last week's net drain of CNY 110B.
On economic data, China’s April new Yuan loans were 1.18 trillion yuan,
stronger than expectations of 1.10 trillion yuan, while April aggregate
financing rose +1.56 trillion yuan, stronger than expectations of 1.35
trillion yuan. On Thursday, China April CPI rose +3.4% Y/Y, right on
expectations, while April PPI rose +1.8% Y/Y, weaker than expectations
of +1.9% Y/Y.
India’s March Industrial production (IIP) tumbled to 4.4% from 7.0%
against an estimate of 5.9% (Y/Y), while manufacturing output also
slumped to 4.4% from 8.5% prior.
*Technical View (Nifty Fut): Positional***
Technically, whatever may be the KA election outcome, Nifty Fut-I has to
sustain over 10875 for a further rally to 10935/10975-11055/11150 and
11195-11225/11375; otherwise sustaining below 10850, it may fall to
10800/10710-10660/10590 and further 10540-10500 in the coming days.
Karnataka election may be another acid test for NAMO/BJP amid DeMo and
GST blues coupled with the issues of unemployment.
*GLOBAL MARKET STORIES: <https://www.iforex.in/news>*
*FOLLOW ME: TWITTER.COM/ASISIIFL*
<https://1.bp.blogspot.com/-1gXY1hs09QY/Wva7ySZ_Q-I/AAAAAAAAP8g/NN3wSUrxXPMYdSQwq0cWEhkLHdpp2k0ZQCLcBGAs/s1600/SGX-NF-PATTERN-11-05-2018.png>
SGX-NF
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