*Market Wrap: 12/06/2017 (17:00)*
*NSE-NF (June): 9622 (-61; -0.63%) (TTM PE: 24.34; Near 2 SD of 25; TTM
EPS: 395; NS-9616)*
*NSE-BNF (June): 23465 (-175; -0.74%) (TTM PE: 29.52; Near 3 SD of 30;
TTM EPS: 795; BNS-23465)*
*For 13/06/2017:*
*Key support for NF: **9570-9530*
*Key resistance for NF: 9655-9715*
*Key support for BNF: 23340-23150*
*Key resistance for BNF: 23650-23750*
*Time & Price action suggests that, Nifty Fut (May) has to sustain over
9675 area for further rally towards 9715-9770 & 9825-9865 in the short
term (under bullish case scenario).*
*On flip side, sustaining below 9655 area, NF may fall towards
9595/9570-9530 & 9490-9415 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 23650 area for further rally towards
23750-23875 & 24000-24100 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 23600 area, BNF may fall towards
23415-23340 & 23150-23050 area in the near term (under bear case scenario).*
Nifty Fut (June) today closed around 9622, dragged by almost 61 points
after making an opening session high of 9642 and day low of 9602,
tracking subdued global cues and fall in banking shares amid concern for
farm loan waiver and telecom NPA. Overnight, on Friday US market closed
mixed amid sudden selling in FANG/Tech stocks in the last hour on
concern of lofty valuations & subdued outlook. But, banks & financials
has supported the SPX-500 to some extent tracking roll back of Dodd
Frank rules.
Early morning Asian market cues were negative amid fall in USDJPY on
“dovish hike” concern by Fed this week, ongoing UK & US political
squabbling and reports of some fake Chinese economic data from some
provinces. Overall, although Comey’s testimony last week lacks the
necessary fire power for an immediate impeachment of Trump, it may open
a barrage of “war of words”, similar testimony of Trump and further
investigations of some of the allegations made by Comey. In UK, a hung
Parliament & a coalition Govt may only increase the political
uncertainty, which may also affect the global risk-on sentiment, which
is so far limited only to GBP. EU market was also in pressure amid fall
in tech shares and UK’s stance of hard Brexit negotiations.
This week is basically for the central bakers starting with Fed on 14^th
June followed by SNB, BOE & BOJ. Market is expecting a dovish hike by
Fed this week; but overall projections, US economic outlook and Fed’s
statement may matter most. As recent spate of US economic data is quite
soft and there is no visibility of Trumponomics, Fed may not indicate
any definitive guidance for a Sep or even Dec rate hike; instead Yellen
may indicate a gradual tapering of B/S from Dec’17 onwards and thus
risk-on trade may be in question. For the market, B/S tapering may be
more important than couples of rate hikes and it may be the real
normalization, which may made the risk trade very vulnerable (Taper
tantrum).
Amid all these global geo-political headwinds and Fed concern, Indian
market today basically witnessed some profit booking as valuations are
quite stretched and there may be also some apprehensions for GST
disruptions. Also, ongoing bank loan waivers in UP & MH may trigger
similar populism ahead of series of state elections in 2018 and may also
influence the 2019 general election. Although, as a result of state
sponsored farm loan waiver, PSBS may be benefited in the short term as
state will clear the NPA, in the longer term such farm loan waiver may
also jeopardize the credit discipline of the system as borrowers may
wait for next election for their loan waiver. Thus, PSBS & MFI were in
some pressure today. Also, such farm loan waiver may increase the
combined fiscal deficit of the Indian economy (negative for Indian
sovereign rating).
Also, there was a meeting today between FM & the PSBS for NPA resolution
issues, where Govt has raised serious concern for telecom NPA/NPL as the
sector is in significant stress. Govt has summoned the chiefs of all the
banks, which has significant telecom loan exposure (SBI/AXIS/ICICI etc)
and thus these scrips were also in some pressure today.
Market was also expecting some quick resolution mechanism of the NPA
woes after so called NPA ordinance; but in reality the resolution of NPA
may take significant time period as the viability of various projects
may be questionable itself; so simple change of management/ownership
will not work (except in cases of some willful defaults). Govt is now
basically pushing the NPA resolution ball to the RBI/Banks by
formulating various committees and thus market may be apprehending that
actual NPA resolution, revival of corporate credit and private
investments may take significant time; there is no readymade solution of
this legacy issues.
In the meantime, India has just flashed its CPI for May at 2.18% against
estimate of 2.60% (prior: 2.99%), helped by fall in food inflation
(pulses & vegetables). But Core CPI for May came at 4.7% (? 4.2%)
against 4.5% in April, which may be termed as sticky and may not comfort
Patel/RBI.
IIP (Apr) came at 3.1% against estimate of 3% (prior: 2.7%). Although,
it sounded double cheers (lower CPI & upbeat IIP), a higher IIP may also
calm the nerves of MPC as it may be implying that GDP may not fall
abruptly in Q1FY18.
Overall CPI data may be quite upbeat, considering RBI’s inflation
trajectory and this may put more pressure on the MPC to cut 0.25% in
Aug’17. But, RBI being data dependent and an inflation hawk, may watch
more macro data for Q1 & Q2FY18 before changing their neutral stance to
accommodative again; sudden dips in Q4FY17 GDP may be also transitory.
Banks also need to transmit more rate cuts to its borrowers and until
small savings rates in India will not aligned with GSEC yields, Banks
may not be in a position to offer lower lending rates than its FD,
irrespective of any further RBI repo rate cut.
Another factor may be any abrupt fall in pulses & vegetables due to more
production (ample rains & demand/supply mismatch; DeMo factor etc) may
be bad for the farmer’s community and we may see more demands for farm
loan waivers in the coming quarters.
Elsewhere, Crude is trading around 46.40 after taking some supports from
45.15 area amid concerns for demand & supply mismatch and some oil
pipeline blasts in Nigeria. *Technically, Crude needs to sustain over
46.95-47.85 area for any further rally towards 49.50-50.50 & 52 zone;
otherwise it may again fall from this dead cat bounce and sustaining
below 45.15 zone, may further fall towards 43.75-42.15 & 39.25-38.15 in
the coming days.*
<https://1.bp.blogspot.com/-hHG7QD7VTJ0/WT6ibB9H9yI/AAAAAAAAMBw/LxGJdmScRAUmSMebMfu1WZHSst1QwFq9QCLcB/s1600/SGX-NF-PATTERN-12-06-2017.png>
SGX-NF
<https://3.bp.blogspot.com/-4uqVjysF8rw/WT6id5cSEMI/AAAAAAAAMB0/kWZKJ0HgOV8o3E95_Qg_wT-yfzgrJbaagCLcB/s1600/BNF-PATTERN-12-06-2017.png>
BNF
<https://2.bp.blogspot.com/-zb7VFj2dZsk/WT6ih5J2LOI/AAAAAAAAMB4/a3FwuWg-AI8s6x0E3iz37WS55rVNNNPXACLcB/s1600/CRUDE-PATTERN-12-06-2017.png>
CRUDE OIL
<https://2.bp.blogspot.com/-qb0IrqJnK88/WT6kWq0PxdI/AAAAAAAAMCA/32zk5s6fiUshMYjUS8jd2VTcQT4RRd8FwCLcB/s1600/Frontiza-Logo.png>
Artocle Sponsored By: frontiza.com
For Advisory Support:
https://t.me/MarketLive_free *
*
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Thanks & Regards,
Asis Ghosh
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