Market Mantra: 17/08/2017 (09:00)
SGX-NF: 9915 (+8)
For the Day:
*Key support for NF: 9900/9860-9825*
*Key resistance for NF: 9930-9980*
*Key support for BNF: 24475-24375*
*Key resistance for BNF: 24600-24725*
*Hints for positional trading:*
*Time & Price action suggests that, NF has to sustain over 9930 area for
further rally towards 9980-10030 & 10095/10115-10160 area in the short
term (under bullish case scenario).*
*On the flip side, sustaining below 9900 area, NF may fall towards
9860-9825 & 9775/9760-9705 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 24525 area for further rally towards
24600-24725 & 24900-25025 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 24475 area, BNF may fall towards
24375-24275 & 24090-23950/23850 area in the near term (under bear case
scenario).*
As par early SGX indication, Nifty Fut (Aug) may open around 9915,
almost flat (+8) tracking muted global cues after Trump dissolves all
his business advisory council in an epic turn of US politics & the
tragic VG incident following resignation of all the leading members
(prominent business heads & CEO) amid an environment of intolerance,
racism & violence and Trump’s stance on the whole VG affairs.
This may be a huge blow to Trump & his narratives of Trumponomics as
these business councils were one of his strength despite daily political
drama. These councils were formed with much fanfare after Trump took
charge of the oval office to guide the administration in areas of trade,
tax reforms, deregulations, investments in US to help US employment etc
to “make America great again”.
Thus, this disbanding of Trump’s strategy & policy council may be a
serious blow to his presidency and eventually, he may resign coupled
with rising pressure on his alleged Russian links investigation.
Although, a resignation or an impeachment of Trump may be a temporary
black swan event for the marker (risk assets), it may be positive in the
long term as an element of daily political entertainment & uncertainty
may be removed in his resignation from WH.
Also, yesterday’s FOMC minutes may be termed as dovish as several
members are concerned over lower trajectory of US inflation for not only
short/midterm, but also for longer term (2 yrs), which is a surprise as
Fed thinks the current subdued inflation is transitory & also
idiosyncratic.
Fed has also concerned over rising asset (stock) prices as it has eased
financial conditions despite multiple rate hikes by 3 times in the last
6 months. But, FOMC minutes yesterday also virtually confirmed a gradual
BS tapering in the “upcoming” policy meets, most probably from either
Sep or Dec’17, starting with no reinvestments of the matured bond amount
principle and then gradually selling un-matured bonds in the market.
Thus, Fed may not take the risk of dual QT (both rate hikes & BS
tapering) in Dec’17 and will go for gradual QE/BS tapering first, which
may be also equivalent to a rate hike for the US economy as bond yields
will surge on the back of greater US TSY bond supplies and if everything
from economics (inflation, GDP, employment/wage growth etc) to politics
(Trump & Co) are fine, then Fed may go for further 3 rate hikes in 2018
starting from March (Q1).
All these US economics & politics has made the USD lower despite some
hawkish effort from Fed’s Mester later in the day arguing for another
2017 rate hike inspite of lower inflation and ECB’s dialing back of
Draghi’s QE signal talk at the Jackson Hole Symposium next week.
A lower USD may be now bad for global markets, most of which are
dependent on exports, but it may be also good for US market & economy.
Thus, despite so much US political headwinds, US market (DJ-30)
yesterday closed almost flat around 22024 (+0.12%); SPX-500 is now
trading AROUND 2465, almost flat (-0.05%) on weaker USD ahead of ECB
minutes today.
Back to home, Indian market may today focus on RBI/Govt sops for some
categories of farm loan (discounts in interest rate), which may be
positive for PSBS and also some selected private banks having relevant
farm loan portfolio.
But, muted Q1FY18 Nifty earnings, down by almost 8.5% (YOY) due to
adverse report cards from PSBS, Pharma, IT for various reasons including
a common Pre-GST disruption may be highly disappointed as Nifty EPS
continue to be under the 400 mark for several years despite so called
green shoots.
Also, a hawkish RBI minutes released yesterday may have dashed the hope
of any further rate cuts by RBI in 2017 and coupled with that, US
political risk, Trump’s NK narratives to divert attention from his
political drama, ongoing border tensions with China-India and an
eventual Fed/ECB QT from 2018 may be some of the headwinds for the
Indian market despite power of domestic liquidity, which may be also in
question amid Govt’s war on black money, eyeing for the 2019 general
election.
A higher EUR may not be also good for EU as well Indian market later in
the day today.
<https://3.bp.blogspot.com/-wWrjHWBNfmY/WZUn8mGGgdI/AAAAAAAAMwI/tZRPvpeul24pIN42s3p2D6BTIlgQaxLlwCLcBGAs/s1600/SGX-NF-17-08-2017.png>
SGX-NF
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Thanks & Regards,
Asis Ghosh
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