*Market Wrap: 20/06/2017 (17:00)*
*NSE-NF (June): 9658 (-17; -0.17%) (TTM PE: 24.39; Near 2 SD of 25; TTM
EPS: 395; NS-9634)*
*NSE-BNF (June): 23685 (-7; -0.03%) (TTM PE: 29.82; Near 3 SD of 30; TTM
EPS: 795; BNS-23709)*
*For 22/06/2017:*
*Key support for NF: 9615-9580*
*Key resistance for NF: 9675-9725*
*Key support for BNF: 23600-23450*
*Key resistance for BNF: 23875-24000*
*Time & Price action suggests that, NF has to sustain over 9725 area for
further rally towards 9775-9825 & 9865-9950/10050 in the short term
(under bullish case scenario).*
*On flip side, sustaining below 9705-9675 area, NF may fall towards
9615-9580 & 9530/9505-9470 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 23875 area for further rally towards
24000-24115 & 24250-24435 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 23825-23750 area, BNF may fall
towards 23600-23450 & 23300-23100 area in the near term (under bear case
scenario).*
Nifty Fut (June) today closed around 9658, down by 0.17% in another day
of consolidation marked by tepid global cues and in absence of any
meaningful domestic/global triggers; NF made an opening session low of
9616 and late day high of 9668.
Indian market today opened almost 32 points down tracking subdued global
cues. Overnight, US market/DJ-30 also closed lower (-0.29%) amid selling
in energy & retail shares following plunge in oil for ongoing concern of
supply glut and concern for Amazon’s aggressive marketing & inorganic
growth strategy (deflation).
After nearly three years of squabbling, MSCI today announced to include
China-A shares into its EM index; as par reports, initial inflow may be
around $18 bln; but if China can reform its stock market as par global
standards, net inflow may be around $350-400 bln over next few years; it
may take as high as 5-10 years for full inclusion of China-A shares into
MSCI EM index (0.73% weightage) for nearly 222 companies.
China was trading almost flat in slight negative tone as the MSCI
inclusion this time may have been largely discounted by the market &
currency (CNY); but it may be a big positive for the overall China stock
market in the mid to long term. Actual inclusion may start from
April’2018 onwards. Stretched valuation of Chinese shares & political
influence may be some of the concerns of the China market.
Japan (Nikkei-225) was trading in negative zone & backs off 22 month
high as Yen got some strength and USDJPY fall yesterday from one week
high after US TSY secretary (Mnuchin) commented that USD may be too
strong for America’s export competiveness. Market may be also looking
for some real progress on US tax reform from Mnuchin & Ryan (US Speaker)
yesterday; but they offered no new comments, which market does not know.
Overall, comments by various US Fed speakers may be also indicating that
Fed may be in no rush for a Sep hike and instead may wait for more US
economic data till Dec’17 to see actual wage & inflation growth, which
warranted any rate hike or not. Moreover, BOJ minutes in the morning
today shows some tapering thought among BOJ members and all these are
causing USDJPY weakness and risk-off mode; USDJPY is now trading around
0.17% lower at 111.25.
The sudden news of Saudi king replacement & shake up of the royal family
may have also affected the risk-on sentiment across the region as it may
ignite further instability in the GCC after Qatar diplomatic issues and
thus commodity currencies were in some pressure apart from factor of
plunge in oil, which is now trading almost flat (+0.24%) after better
than expected crude stocks drawdown report from US API this morning and
this Saudi Kingdom development.
As a result of China’s inclusion in MSCI index, all the concerned EM (s)
may see some rebalancing of funds and India may also see some outflow;
total FPIS investment in India now may be around $350 bln including bond
market, which is equivalent to the country’s FX reserve of around $375 bln.
European cues were also negative amid slide in energy related shares
(oil) and concerns of UK political jitters & Brexit uncertainty. Looking
forward, global market may focus into coalition Govt announcement from
Conservative & DUP. There is also some speculation that Theresa may
resign and UK may also exit EU without any deal at all; although a
majority of the Tories may not approve “no Brexit deal”. All eyes will
be on the Queen’s speech today and Theresa will have 5 more days to form
a negotiated coalition Govt with DUP; otherwise the minority
Conservative Govt may fall. All these political jitters are taking a
toll on global/EU market sentiment along with recent sad incident of
London fire & repeated terrorist attacks, for which Theresa Govt may be
under immense pressure now.
Amid all these ongoing global concerns, Indian market also ended in red
(-17 points); looking forward, Indian market may focus on IBC/NPA
resolution effectiveness and issues of GST disruptions amid poor IT
infrastructure and preparedness among the stakeholders. The present
format of GST may be termed as a modified version of VAT (“old wine in
new bottle”) and may not be the ideal & simple concept of “one tax one
nation”, originally thought.
Indian market today recovered from deep intraday loses after FM/Govt
announced that Kerala is passing the SGST bill through an ordinance and
the nation is ready for GST rollover on 1^st July except the state of
J&K, which may also join later. Although, there may be considerable
apprehensions about the GST disruption, market may be also in some type
of dilemma ahead of the key event amid divergent views of the experts.
Domestic market was also cautious today ahead of key RBI minutes of June
policy meet later in the day to gauze RBI/MPC’s thinking about future
trajectory of rate stance; market may be expecting a rate cut in Aug’17
amid consistent fall in headline CPI and sudden fall in Q4FY17 GDP.
Market may be also concerned that due to inclusion of China in MSCI EM
index, India may see around $220 mln outflow; although the amount is not
significant, overall sentient may be affected today.
Indian market today may be also supported to some extent by IMD forecast
of more intensified rains in the days ahead and an Australian weather
report that threat of El-Lino may have receded significantly for the
time being.
Nifty metal index (down 1.2%) was the leading sectoral loser, led by
losses in Hindalco; initially some metal stocks were in demand (Tata
Steel, JSW Steel) for hopes of consolidation in the debt ridden
metal/steel sector under RBI IBC Act among so called dirty dozen. Market
is expecting some M&A as a result of NPA resolution mechanism; although
it’s viability may be at doubt.
Oil explorers fell after global oil prices hit seven-month lows, with
ONGC falling as much as 2.5% and Oil India down as much as 1.9%.
FMCG stocks were the best performers. HUL, Colgate Palmolive, Britannia,
Emami gained between 1-3%; ITC also recovered from loss on hopes of
favourable GST rates and better monsoon this year.
Among other gainers, aviation companies were in focus with all the three
airliners SpiceJet, InterGlobe Aviation and Jet Airways adding in the
range of 2-3% in an otherwise weak market after good growth in passenger
traffic and lower crude oil prices. Price of aviation fuel is the
biggest cost factor for low-budget carriers; in addition Govt’s
deregulation move to privatize Air India may be also supporting the
airline sector; Tata group may be buying Air India as par some market
reports despite huge debt of Rs.55000 cr.
Amtek Auto hit an upper circuit limit of 10% at Rs 28.15 on media
reports that 21 investors showed interest to buy a stake in the
debt-ridden company. Monnet Ispat rallied by nearly 17% on news that JLF
has forwarded the case to NCLT under IBC (hopes of another M&A?).
LT was in limelight initially after reports that ABB may buy its
electrical division; later the stock fall to some extent from day high
after Govt confirmed that it sold 2.5% of its stake through SUUTI and
garnered around Rs.4000 cr in the process; SBI is the buyer of the
stake. Thus it basically some sort of stake transfer between the Govt
itself.
Today, Nifty was supported by HUL, Sun Pharma & DRL (USFDA approval for
product), RIL (fall in crude oil & R-Jio optimism), SBI, HDFC Bank & LT.
Nifty was dragged by Hindalco, ONGC, Tata Motors (unfavorable GST
concern for automobile sector) Lupin & TCS (earning concern) overall
market breadth may be quite negative today with advance/decline in Nifty
was at 17/34.
Meanwhile, RBI policy minutes just flashed and overall, it may be termed
as quite hawkish and most of the MPC members are cautious on inflation &
growth with “wait & see” approach; RBI may be also very concerned about
huge NPA, its resolution and PSBS recapitalization. Any rate cut hopes
for Aug may be shattered now, as RBI may also want to watch any
significant fund outflow due to consistent hawkish stance from Fed.
Elsewhere, in UK a diluted speech from the UK Queen, suggesting a softer
tone of Brexit contrary to earlier rhetoric of Theresa and some hawkish
tone from BOE economist Haldane advocating for an immediate rate hike
has supported the GBPUSD and its trading now 0.65% up, recovered quite
smartly from earlier loses. But FTSE dropped further by 0.25% as a
strong GBP may not be good for UK’s export. Also, overall political
uncertainty is still significant in UK despite hawkish tone from some
MPC members and going forward, politics may take greater role than
economics.
WTI-Oil yesterday plummeted below $43 handle due to increasing concern
of supply glut & Russian oil minister’s comments that they will not meet
US hale oil producers for a production cut. But today better than
expected US API drawdown of crude stocks may have supported oil in the
Asian/EU session; although the API report was basically mixed as
gasoline & distilleries stocks surged. But, oil may have also under some
pressure from today’s Saudi Kingdom shaking.
But, it got some boosts and now trading near the vital trend line
resistance of 43.75, which was the earlier support after Iran oil
minister commented that they are consulting the OPEC members for further
production cut; although it may be quite difficult. The Iran oil
minister also admitted that they have underestimated the potential of
the US shale oil production capacity & viability. OPEC-NOPEC committee
sees oil market rebalancing in Q2CY18.
Overall, it seems that various OPEC producers are now in some type of
panic mode, as oil is hovering around $43 with very high probability of
going below $40 in the near future, which may affect their fiscal budget
significantly. Previously, OPEC & also Russia are actively advocating
for sub $45 oil as they may have assumed that US shale oil may not be
viable below $45 handle. But, latest technology may be making the
difference for US shale oil and it clearly shows that OPEC may not be in
control of the oil price at all. Looking ahead, today’s official EIA oil
storage data may be highly focused by the market for the next move of oil.
*In any way, technically for Crude oil, 43.75-44.25 may be now vital
resistance; a similar capitulation in oil after Fed hike in Dec’15. This
may be a reminder and also not good for the risk-on sentient, if oil
breaks 42-40 this time.*
<https://3.bp.blogspot.com/-L5ptbZzJQiM/WUqPIw89EyI/AAAAAAAAMIQ/iqGBAH4bhC8w_ynRvjLxdgYRB1Brrr6ygCLcBGAs/s1600/SGX-NF-PATTERN-21-06-2017.png>
SGX-NF
<https://1.bp.blogspot.com/-C2RPODAFO_g/WUqPLm3y61I/AAAAAAAAMIU/f9UizjNfXSYYyUz8bWp80vW5ua8faxcCgCLcBGAs/s1600/BNF-PATTERN-21-06-2017.png>
BNF
*
*
<https://3.bp.blogspot.com/-dbp_XgjDeHU/WUqP-vYybmI/AAAAAAAAMIc/ESyAliA38-glo1G6T-sEDsLn_5Qx9CMJgCLcBGAs/s1600/Frontiza-Logo.png>
Article courtesy: frontiza.com*
*
--
Thanks & Regards,
Asis Ghosh
--
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