*Market Wrap: 12/04/2017 (19:00)*
*NSE-NF (April): 9226 (-38 points; -0.42%)*
*NSE-BNF (April): 21714 (-45 points; -0.21%)*
*IN 10Y G-SEC: 6.782 (-0.38%)*
*USDINR (Apr): 64.77 (+0.21%)*
*For 12/04/2017:*
*Key support for NF: 9170-9115*
*Key resistance for NF: 9280-9315*
*Key support for BNF: 21675-21450*
*Key resistance for BNF: 21775-21875*
*Time & Price action suggests that, Nifty Fut (Apr) has to sustain over
9315 area for further rally towards 9375-9425 & 9465-9505 in the short
term (under bullish case scenario).*
*On the other side, sustaining below 9295/9275 area, NF may fall towards
9215-9170/9150 & 9115/9085-9040 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 21825 area for further rally towards
21875-21975 & 22050-22150 area in the near term (under bullish case
scenario).*
*On the other side, sustaining below 21775 area, BNF may fall towards
21600-21450 & 21300-21150 area in the near term (under bear case scenario).
*
Nifty Fut (Apr) today closed around 9226, down by 0.42% after making an
opening session high of 9262 and day low of 9170. Indian market today
opened in a negative bias following lingering geopolitical concerns over
NK/Syria/US issue; but despite some positive cues from EU market, the
domestic market dragged lower as long unwinding may be happening before
start of Q4 earnings season. Although market may be covering shorts at
every dips, it seems that no significant long position is being built at
the higher levels to continue further upwards momentum. Although, FII(s)
are net buyers in the FNO segment, they are also consistent sellers in
the cash segment for the last few days and may be also writing calls at
every higher levels and overall, market may be waiting for the actual
earnings trends in Q4 as valuation is already quite expensive.
For FY-17, Nifty EPS expectations may be around 6-10% (395-410) and for
FY:18-19, analysts are projecting 15-20% double digit growth after last
few years single digit growth of around 7% on an average. Market may be
very optimistic about phenomenal EPS growth from metals & PSBS this time
(favourable base effect & better operating leverages and stable NPA?).
Market is also expecting a tepid earning from Infy this time also on the
back of weak USDINR & other cross currency headwinds, changing landscape
of IT technology, H1B visa issues etc. More than earnings, market may
closely watch its guidance and a probable announcement of share
buybacks. Infy’s earnings & guidance tomorrow may be vital as it may set
the trend of report card of other IT companies.
*Technically, for Infy, 930-900 area is vital and consecutive closing
below that, the stock may correct more; otherwise it will bounce back.*
Apart from IT, Indian market today was dragged by Tata Steel (concern
for its proposed German JV & tepid metal prices), RIL (concern for its
telecom venture as it seems that R-Jio is reluctant to start
commercially despite TRAI direction), PSBS & some private banks, Adani
Ports (adverse SC order on Adani Powers) & Maruti.
Nifty was supported by Infratel (buzz of M&A with Indus tower), Yes
Bank, Eicher Motors (analyst’s upgrade) & Sun Pharma
Meanwhile, Indian CPI & IIP data just now flashed as:
CPI (March): 3.81% (estimate: 3.98%; prior: 3.65%)
Core CPI: 4.90% (Prior: 4.83%)
IIP (YOY-Feb): -1.2% (estimate: 1.3%; prior: 2.7%)
Mfg. Output (MOM-Feb): -2% (prior: 2.3%)
Cumulative Industrial Production (Feb): 0.4% (prior: 0.60%)
At a glance, incrementally lower IIP data may be signaling tepid
economic activity. Although, headline CPI was higher primarily due to
increase in fuel prices and also helped by lower food inflation, RBI may
not oblige to shift its stance from neutral to accommodative and cut in
Aug’17 as expected by some analysts as overall CPI trajectory is upwards.
Going forward, even without external factors, RBI may be in pause in
FY-18 due to uncertainties about GST, 7-CPC arrears, monsoon and its
overall effect on the CPI. Although, as par old series & also some high
frequency data, India’s GDP may be growing below 5%, Govt/RBI may not
acknowledge it officially and thus despite tepid IIP/ real growth &
higher CPI, RBI may be on hold, if not hike in FY-18. An economy,
officially growing around 7-8% with a headline CPI of around 4.5-5.5%,
does not require any rate cuts from the central bank; otherwise it may
form bubble (too much hot economy).
All being equal, real transmissions factors may be now more important
for the banks for more rate cuts by the RBI. But, for that, some
structural reform may be necessary by the Govt, like lowering of India’s
small savings rate. Also, any drastic rate cut by RBI may also affect
INR adversely and subsequently Indian bond yields may also slide
affecting FPIS inflows significantly. Bond markets may be more important
for the Govt to finance its fiscal deficit (capex).
Also, IMD may shortly provide its first official forecast about 2017
monsoon trajectory in India and market may be also apprehending that as
deficient monsoon this year on the back of El-Nino (as par Skymet).
Globally, EU market sentiment was improved today after a telephonic
conversation between Trump & Chinese Prez (Xi) to diffuse the lingering
geopolitical tensions in NK region in a peaceful manner rather than a
war. Trump is also now showing some urgency for a consensus with the
warring RNC members to pass his health care bill & repel the Obamacare.
As par reports, Trump may also shortly take his “phenomenal” tax cut and
also the infra spending plans shortly, irrespective of the fate of
health care bill. But this rhetoric is nothing new and market may be
eager to see some real action in this regard; otherwise reflation/Trump
trade may be in jeopardy.
In EU, better wage growth and employment numbers in UK may have also
helped the sentiment despite concerns of French election and Brexit.
*Watch 109-107 zone in USDJPY & 2335-2325 zone in $SPX-500 for any
further “risk off” trade; otherwise expect some bounce back.*
<https://3.bp.blogspot.com/-JGE49JmLJ4Q/WO48DzmTShI/AAAAAAAALTg/CUCRms65H6cp3gsazTc-hKFNdd97ggdFQCLcB/s1600/SGX-NF-PATTERN-12-04-2017.png>
SGX-NF
<https://1.bp.blogspot.com/-JiGBNhQW5P8/WO48F4C7G3I/AAAAAAAALTk/SeGTCUHi9E40tD0V-cYbOfYS7pMBHgjjgCLcB/s1600/BNF-PATTERN-12-04-2017.png>
BNF
<https://4.bp.blogspot.com/-zojcj6jvqE4/WO48Jbuiq8I/AAAAAAAALTo/uqw-7QcUOMQsN7XLaHjayDMj5GFiX_kuQCLcB/s1600/USDJPY-PATTERN-12-04-2017.png>
USDJPY
<https://3.bp.blogspot.com/-9iHwm5YG-bA/WO48Mwxm5qI/AAAAAAAALTs/J0REQlLoDtwUGNTxcwZghaaY2WnIbMmggCLcB/s1600/SPX-500-PATTERN-12-04-2017.png>
*
*
SPX-500
--
Thanks & Regards,
Asis Ghosh
--
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