Market Wrap
<https://www.iforex.in/news/nifty-closed-almost-flat-ahead-q2-earnings-tracking-muted-global-cues-domestic-optimism-about-gst-revisions-43021>:
09/10/2017 (17:00)
NSE-NF (Oct):10020 (+17; +0.17%)
(TTM PE: 25.95; Abv 2-SD of 25; TTM Q1FY18 EPS: 385; NS: 9989; Avg PE:
20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Sep):24160 (+48; +0.20%)
(TTM PE: 27.62; Abv 2-SD of 25; TTM Q1FY18 EPS: 878; BNS: 24252; Avg PE:
20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 10/10/2017:
*Key support for NF: 9980-9935*
*Key resistance for NF: 10065-10125*
*Key support for BNF: 24050-23750*
*Key resistance for BNF: 24400-24650*
*Hints for positional trading:*
*Technicals indicate that, NF has to sustain over 10065 area for further
rally towards 10125-10165 & 10205-10250 area in the short term (under
bullish case scenario).*
**
*On the flip side, sustaining below 10045 area, NF may fall towards
9980-9935 & 9880-9810 area in the short term (under bear case scenario).*
*Similarly, BNF has to sustain over 24400 area for further rally towards
24550-24650 & 24750- 24850 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 24350 area, BNF may fall towards
24150-24050 & 23750-23650 area in the near term (under bear case scenario).*
*Indian market**(Nifty Fut/India-50)* today closed around 10020, up
marginally by 17 points (+0.17%) after making a day high of 10033 and
opening minutes low of 9984 tracking muted global cues (renewed NK
tensions & muted China service PMI) and favourable GST rates &
compliance revisions on certain sectors (FMCG, SMES & exporters).
Basically, market today consolidated within a narrow range ahead of
Q2FY18 earnings season from tomorrow, kick starting with Dena Bank,
followed by TCS, Indusind Bank, RIL, South Indian Bank later in the week.
Also, Sep CPI & Aug IIP may be keenly watched for the Indian market to
gauze the strength/recovery of the economy after muted Q1 GDP amid GST &
DeMo disruptions. Again, market may be apprehending lingering effect of
Post-GST implementations disruptions on frequent changes in tax rates,
which may compel traders to keep minimal stocking. Also, overall auto
sales figure (SIAM) for Sep may not be so much encouraging as it clocked
only 10% growth (YOY) across various categories on an average.
Today Nifty was supported by ITC, HDFC, Yes Bank, Bajaj Fin, Kotak Bank,
HUL, Adani Ports, Eicher Motors, Indusind Bank & Infy cumulatively by
around 32 points, while it was dragged by RIL, VEDL, ONGC, Auro Pharma,
HDFC Bank, Power Grid, HPCL, BPCL, IOC, Gail by around 28 points altogether.
Coal India gained around 1.68%, the biggest in the Nifty pack today on
better production figure and reported coal shortages across various
thermal power stations. The coal sector is also gearing up for more
liberalized commercial coal mining regime.
Overall market was supported by FMCG, consumer durables/pumps
(favourable GST rates), Gems & Jewelers (higher gold rate & PMLA
relaxation), Banks & Financials, and property developers/reality,
automobiles (festival & wedding season demand optimism), while it was
dragged by energies, OMC (lower oil & margin squeeze and PSU
consolidations).
*Morning recap
<https://www.iforex.in/news/asian-markets-edged-china-catches-holiday-breaks-renewed-nk-sabre-rattling-may-be-affecting-usd-sentiment-today-42985>:*
*Indian market**(Nifty/India-50)* today opened almost flat on subdued
global cues and GST optimism ahead of Q2FY18 earnings. As expected, on
Friday weekend, Govt has reduced GST rates on a number of sectors facing
severe headwinds for higher rates. Govt also streamlined GST for
exporters and certain SMES. All these have positive impact on the market
coupled with renewed optimism about metals (global reflation) on weekend
Friday. Tata Steel was very upbeat on higher domestic productions and
overall optimism.
Revised GST on manmade yarns, water pumps, hotels & tourism and PMLA
benefit to the gems & jewelries were specifically positive for those
sectors. On 5^th Oct, India’s service PMI for Sep also flashed at 50.7,
marginally up from the boom/bust line of 50 (prior: 47.5); this was also
good for the overall market sentiment after GST shock.
But, still there are various ambiguities & over regulation in GST and
lack of common rules & regulations at PAN India level, which is making
overall collection & compliance process harder for the stakeholders,
especially the SMES. Around two lakh truckers are on a two day strike
for harassment & corruption issues at various state border RTOS.
Market is hopeful that in H2, Indian economy may come back as DeMo & GST
disruptions effect will fizzle out after Govt’s “pro-active” corrective
actions (reform) for various GST ambiguities. But market may not be so
much confident about earnings recovery in Q2 and thus all focus now may
be on H2FY18.
Although, some market participants are now projecting an average Nifty
EPS of around 486 in FY-18, present trend may be indicating it as around
418; actually, 400 Nifty EPS is being proved as a big hurdle for the
Indian market for quite a few years now despite all the so called “green
shoots” in the economy. Actual Q1FY18 TTM EPS is now around 384, almost
2.5% down from FY-17 (Q4FY17) EPS of around 393. Earnings need to catch
up with the rising PE & the market, irrespective of any narratives.
Also, resolution of NPA may be a bigger headwind for India’s legacy
issues of twin balance sheets; present NCLT rules may have several
deficiencies for a quick & meaningful resolution of the problem and kick
starting the private investments thereof. Today, Indian PM is slated to
meet global oil giants including RIL-BP to explore higher investments in
oil infra and lower reliance on imported crude oils. A higher WTI above
$55-60 level may not be good for the Indian economy.
*Globally*, most of the major *Asia-Pacific markets *edged up**today in
a holiday thinned market amid *subdued global cues on lower USD* after
renewed NK sabre-rattling on the weekend despite “upbeat” US economic
data; China spot market catches up with the global/future market, while
Japan, Canada & also US market are closed fully/partially. A muted China
service PMI this morning may have also affecting the overall “risk on”
trade mood.
Although, *US NFP for Sep* flashed as terrible at -33k vs estimate of
90k; prior: 169k-R, average hourly earnings grew by 0.5% against
estimate of 0.3%; prior: 0.2%-R (MOM); unemployment rate was 4.2% vs
estimate/prior of 4.4%. In brief, higher revisions of Aug NFP coupled
with surge in wage growth at +2.9% annualized rate made the USD buzzing,
but it soon reversed the gain on realization that all the NFP figures
including the blockbuster wage growth are distorted due to the impact of
dual hurricanes and thus may be revised further.
*USD*got some further jolts on reports that NK is planning to test
another ICBM around 8^th Oct-18^th Oct, (NK Party Anniversary-China
Party Congress) capable to hit the US west coast. Thus, *USDJPY *which
rallied to 113.44 soon after the NFP, again fall to 112.60 at the day
end (Friday). Market may be also concerned that the sudden rise in US
hourly wage growth may be skewed for hurricane related temporary relief
work and thus market will now keenly watch Nov & Dec’17 NFP data for an
overall trajectory of US job market strength.
In any way, FFR is now showing above 80% of a Dec’17 rate hike
probability, considering ongoing Fed talks and recent spate of US
economic data, which may be termed as mixed overall. But USD is now
basically a victim politics rather than economics. On the weekend,
Trump’s tweeter handle was again abuzz with NK rhetorics in a series of
anti-NK tweets. Also, overall Fed speeches may be indicating that Dec’17
rate hike by Fed may be one & off (dovish hike), considering soft US
inflation & change in Fed leadership.
On geo-political front, *Trump* basically tweeted that his three
predecessors has been talking with NK for over 25 years without any
meaningful result despite paying the hermit state a huge amount of
“ransom money” ; in such scenario “only one thing will work”. This may
be indicating that Trump is settling for a “war” against NK & Kim and
thus *USDJPY* is under pressure and is now trading around 112.60, almost
unchanged.
It’s now seemed that despite scope of “dialogues” with NK, Trump is
showing no urgency to talk, because a NK “war” hysteria may be a perfect
instrument in the hand of Trump to make USD lower despite a hawkish Fed
going for a dual QT coupled with some visibility of US tax reform and
mixed US economic data; a lower USD is good for US economy, imported
inflation and US corporate earnings/exports. Ongoing domestic US
political drama may be also helping to keep USD down.
*Overnight on Friday weekend, US market*closed almost flat on dilemma
between economics & politics and concern of stretched valuation ahead of
Q3 earnings. DJ-30 lost 2 points to close almost unchanged at 22774,
while S&P-500 fell 0.1% to finish at 2549 and NQ-100 edged up by 0.1%;
barring IT, almost all the sectors were in red on Friday. Energies
(lower oil) & Pharma (Amazon disruption fear) and some retailers (poor
guidance) were under pressure.
*US stock future*(*SPX-500)* is now also trading almost unchanged at
2547 and looking ahead 2555-2565 zone may be a big hurdle for SPX-500
and immediate support is now at 2530-2510 area.
Also, *EUR* may get some strength as Catalonian separation movement may
be backtracked and there was also some news that Merkel may forge a
working coalition Govt in Germany soon. A higher EUR may not be good for
EU & global market sentiment. Anti separation movement may be gaining
traction in Catalonia as Brexit like economic uncertainty looms in and
several big corporates & banks are considering a relocation of their HQ
from the Catalonian region; ultimately no one wants such economic
uncertainty affecting their own standard of living.
Elsewhere, *Australian market (ASX-200)* closed around 5739, up by
almost 0.50% on lower AUDUSD, good for AU export heavy market. AU market
today was also helped by upbeat banks & financials and hotels (M&A buzz)
and gold miners (higher gold today). But later it was dragged by
metals/miners (muted China service PMI) and energies (lower oil).
*AUDUSD*is now trading around 0.7760, down by almost 0.22% on muted
China Service PMI and regional (NZ) political uncertainty; *NZDUSD* is
also trading almost flat at 0.7069 (-0.02%).
Although, *Japan* is closed today, *Nikkei-Fut* is trading slightly
higher at 20690 vs previous close of 20630 (+0.30%) despite marginally
higher Yen today. As par some reports, Abe may face tough competition in
the snap election this month and may not win the absolute majority. This
may be good for Yen as Abenomics & BOJ QQE debate heats up, which may
force Kuroda to go for some back door QQE tapering earlier than
expected. But for the short term, BOJ is expected to continue its ultra
dovish stance because of JP political risks (Yen negative).
*China (SSE)*is now trading around 3374, up by almost 0.76% after a week
long holiday, catching up the global index/future level on upbeat China
Mfg PMI & selective RRR cuts by PBOC just before start of the golden
week holiday.
Actually, *China-A-50 FUT* is down today by almost 1.60% and now trading
around 12190 vs close of 12385 on terrible Service PMI for Sep, which
was flashed as 50.6 vs estimate of 53.1; prior: 52.7; composite PMI came
as 51.4 vs prior 52.4.
Overall, muted *China composite PMI* (private data-Caixin/Markit) may be
indicating that a slower Q4 GDP despite higher PPI and upbeat official
(Govt) Mfg PMI few days ago. There are wide divergences between
official/Govt & Private PMI data for Sep, just ahead of the China party
congress.
As par some official China report (CASS), Q4 GDP may come around 6.7%,
while full CY-17 GDP may be around 6.8%; Q4 CPI may be reported as 1.7%.
As par Fitch, China is gradually making progresses towards steady
reduction in shadow banking, which is helping in containing widespread
financial risks. Any potential shock of liquidity crisis in the system
is also being addressed by the PBOC in recent cut of targeted RRR
(priority sectors/MSMES).
Today, PBOC fixed the mid-point of *USDCNY* at 6.6493 a little higher
than on 29^th Sep without any OMO to flush the liquidity of 180 bln Yuan
from the China money market. Today China spot market was helped by
automakers, banks & financials, property developers and retailers on
upbeat holiday sales.
*Hong-Kong*(HKG-33) stock future is now trading around 28330, down by
almost 0.50% affecting the overall regional sentiment. HK market was
today dragged by casino players/gaming stocks such as Macau on muted
China travelers’ spending during golden holidays.
Today, HK was also dragged by Chinese property stocks on muted sales for
Sep in some second & three tier cities and energies, while it was helped
by banks & financials (recent China RRR cut).Overall, HK market is
waiting for maiden policy address this week by the City’s CEO (Hong-Kong
policies).
Meanwhile, *Crude Oil (WTI)* is now trading around 49.35, up by 0.14% as
there were no damages out of latest US storm (Nate) for the US oil
refineries; it was down to 49.02 on 6^th Oct (weekend) amid concern of
Nate storm coupled with a Saudi-Russia comments that production
extension cut is not on the table right now, although it may be
discussed later to stabilize the oil market. US oil rigs count (Baker
Hughes data) also edged down from 750 to 748 (neutral effect).
Looking Ahead, WTI need to sustain above 49.35-49.00 zone; otherwise we
may see more OPEC-NOPEC jawboning to keep the price higher.
*Gold *is now trading around 1283, up by almost 0.51% on weak USD amid
fresh NK tensions despite a SK report that “all are quiet apparently &
no signs of any ICBM yet” coupled with growing US political/WH debate of
an “adult day care center” and “nuclear war”.
*EU Market
<https://www.iforex.in/news/eu-market-gained-supported-catalonian-anti-separation-movement-offers-dialogue-43027>
Edged Up Supported By Anti Catalonian Separation Movement & Flat EUR
Despite An Upbeat German IIP Data *
*EU market *is trading marginally higher at Stoxx-600 around 0.20%
higher, while DAX-30 is up by almost 0.12%, CAC-40 is unchanged,
FTSE-100 is down by 0.26% and IBEX-35 is rallied by almost 0.65%.
Overall sentiment of the EU market is today being supported by
Catalonian anti-separation movement coupled with an upbeat German IIP
data and hopes for an imminent coalition Govt led by Merkel in Germany
Although, *Catalonian separation* & bloody referendum movements is still
simmering, considering hard stance by the Spanish Govt and a large
anti-separation demonstrations on Sunday in favour of Spanish unity, a
senior member of the Catalonian Govt/administration signalled for a
dialogue with the Spanish Govt and thus Spain shares are rallying and
helping the overall EU market sentiment.
But all eyes may be also on tomorrow’s legislative action by the
Catalonian leader, if he declared the “independence”, although
probability is very low as Spanish Govt is pressurizing the
pro-separation Catalonian administration through economic blockade and
simple relocation of business headquarters out of the region and also
through threat of security forces.
Such financial pressure could make the life of Catalonians miserable, if
it goes for ultimate separation and thus overall political uncertainty
may be also a near term headwind for the market.
*Overall, EU market*is today being supported by utilities, techs while
dragged by industrials, energies, banks & financials and some rebound in
EUR earlier tracking an upbeat German IIP data for Aug, although the
data may be encouraging for German economy itself despite recent
strength in EUR. German bank DB was dragging the market a reported rift
with its largest shareholder, a China conglomerate (HNA Gr).
*FTSE-100*is under pressure on strong GBP as ONS may revise upwards the
UK inflation and wage growth for a statistical error; GBP sentiment was
also boosted by Theresa’s bid to regain control over the conservative
party by sidelining Brexit minister Johnson, who may be also a potential
candidate for UK PM in the event of Theresa’s sudden resignation.
UK market today is also being dragged by miners, energies, exporters
(higher GBP), and retailers while it was helped by gold miners,
defensive sectors, some utilities and consumer staples.
USDJPY Is Almost Flat
<https://www.iforex.in/news/usdjpy-almost-flat-dilemma-another-imminent-nk-icbm-test-upbeat-distorted-us-nfp-report-43037>
On Dilemma Of Another Imminent NK ICBM Test & An Upbeat But Distorted
US NFP Report:
<https://1.bp.blogspot.com/-lFKpUpkTIYc/Wdu-3gtihAI/AAAAAAAANYo/2PVb30gN2U8j6lauKCAX7EyV6jzKNXTUgCLcBGAs/s1600/SGX-NF-PATTERN-09-10-2017.png>
SGX-NF
<https://3.bp.blogspot.com/-f5jeltQfT4I/Wdu-5sjWnqI/AAAAAAAANYs/DUFlwKAa-tsdLP-FerjPyJANYsr94PpLgCLcBGAs/s1600/BNF-PATTERN-09-10-2017.png>
BNF
<https://2.bp.blogspot.com/-zMdzGpOBOz4/Wdu-83PaiaI/AAAAAAAANYw/fA2a30UGOQYZcnEXL1MF6S5ByFv3jDdmQCLcBGAs/s1600/GBPUSD-09-10-17.png>
GBPUSD
--
Thanks & Regards,
Asis Ghosh
--
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