Market Mantra <https://www.iforex.in/news>: 28/09/2017 (09:00)
SGX-NF: 9720 (-22)
For the Day: NF/NS & BNF/BNS
*Key support for NF: 9695-9645*
*Key resistance for NF: 9785-9825*
*Key support for BNF: 23700-23600*
*Key resistance for BNF: 23900-24100*
*Hints for positional trading:*
*Technicals indicate that, NF has to sustain over 9785 area for further
rally towards 9825-9860 & 9910-9950 area in the short term (under
bullish case scenario).*
*On the flip side, sustaining below 9765-9745 area, NF may fall towards
9695-9645 & 9580-9450/9405 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 23900 area for further rally towards
24100-24300 & 24550-24750 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 23850 area, BNF may fall towards
23700-23600 & 23450-23250 area in the near term (under bear case scenario).*
As par early SGX indication, Nifty Fut (Sep) may open around 9720, down
by almost 22 points tracking *mixed/subdued global/Asian cues* after an
“unimpressive” Trump tax reform/cut plan devoid of any retrospective
effect and very little on details about deficit funding. Regional Asian
market (HK/China) is also under some pressure on rating downgrade of a
blue-chip Chinese property developer (Wanda) by S&P coupled with
forthcoming long holiday season in China (Golden week).
Although, NK tension seems to be cooled down a bit, as par latest report
SK is apprehending some NK ICBM or even a Nuke test around 10-18^th Oct
coinciding with the anniversaries of NK Communist Party and also China’s
Party Congress time!!
USD got some boost yesterday after upbeat durable goods order, pointing
towards a higher inflation for the US economy. But core portion of the
same was not so much impressive and tepid pending home sales figure may
be also distorted by Harvey & coupled with that some disappointments for
the Trump tax reform proposal, USD dropped a little bit along with risk
trade.
But US stock market got some boost after dovish jawboning by Fed’s
Bullard an influential known dove, advocating for no rate hike in Dec’17
for inflation “mystery”; he also doubted about credibility of Fed’s
dot-plots in the financial market; a lower USD may be good for US
stocks/exports earnings & imported inflation perspective.
Also, a tax cut is a tax cut be it retrospective or not and thus US
stocks got some late boost along with long term 30YTSY yields; thus the
old Trumpflation trade may be again coming back for the US market. US
small caps (Russel-2000) may be benefited most from Trump’s tax plan and
as par US comm. Sec (Ross), US GDP may be boosted by 1% for this long
awaited tax reform.
But, the retrospective effect may also be significant for US corporate
earnings this year (CY-17) and was one of the reasons for so much US
stock market optimism; previously market was expecting that all cuts of
the Trump’s tax proposal may be effective from Jan’17irrespective of
their date of legislative passage & implementation.
Market may be also concerned about Trump’s ability to pass his tax
reform plan by the US congress amid deep divisions within his own RNC
party and a hostile DNC as this tax plan is basically aimed to slash
taxes on corporates & the riches.
*Overnight US stock market*closed in green, supported by US tax cut
optimism, banks & financials on higher bond yields and bargain hunting
in tech/FANG stocks, while dragged by utilities, consumer staples and
real estate investment trusts; DJ-30 closed around 0.20% higher, while
S&P-500 was up by around 0.40% and closed at 2508 after hitting an
all-time high of around 2510; NQ-100 rallied by almost 1.2%.
*US stock future (SPX-500)*is now trading almost unchanged at around
2505 (+0.04%) on subdued Asian cues ahead of EU market opening. Looking
ahead, SPX-500 need to sustain above 2415 zone for further rally;
otherwise it may come down again.
Back to home, *Indian market* (Nifty Fut) is now trading around 9740,
almost unchanged after some early panic amid slow down fears; but may be
covering some shorts from the positional vital support of 9695 in Nifty
Fut (Sep).
Govt may be also concerned about GSTN fiasco and low number of return
filling for Aug amid subdued GST collections. Thus Govt is engaged
itself with the concerned GST stakeholders, especially the SMES and
small traders, for which proper GST implementation may be a big challenge.
Govt may be also under immense pressure to “do something” for the
economic revival after DeMo & GST disruptions, which is now become a
“hot political issue” for both the Govt/BJP & Oppositions/INC; but an
immediate or even short term relief through a credible fiscal stimulus
package may be very limited as the core issue may be of structural in
nature.
Slow down in India started long before DeMo with an environment of very
high real rate of interest/bank lending in India, stressed twin balance
sheet and lack of private investments. Also, legacy issues of very high
inflation/price instability may be hampering real wage growth and
eventual discretionary consumer spending.
But drastic cut in RBI repo rate like 1% may not be possible for India
right now because of bond market factor/high & attractive Indian bond
yields for FPIS and USD/INR equation. Unless Indian banks lend to the
corporates & SMES at a comparable rate with its DM/EM counterpart like
China around 4-6%, it may be very difficult for them to sustain the
increasing competition from overseas cos.
<https://2.bp.blogspot.com/-1Db0qHah2vs/WcyROlCBTkI/AAAAAAAANR0/1k0dNWA4Gd8pcPhnibibhpSQMphqWAjuQCLcBGAs/s1600/SGX-NF-28-09-2017.png>
SGX-NF
--
Thanks & Regards,
Asis Ghosh
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