*Indian Market May Continue To Focus On PSBS Recaps Mechanism & Earnings
Trajectory; Yes Bank NPA Divergence Fiasco May Cause A Sense Of Trust
Deficit On The Whole Pvt Bank Space & The Sector May Be Rerated*
*Market Mantra* <https://www.iforex.in/news>: 27/10/2017 (09:00)
SGX-NF: 10395 (+38)
For the Day: updated at 09:10
*Key support for NF*: 10325-10270
*Key resistance for NF*: 10450-10505
*Key support for BNF*: 24800-24600
*Key resistance for BNF*: 25250-25500
*Trading Idea (Positional):***
*Technically,**NF*has to sustain over 10450 area for further rally
towards 10505-10575 & 10625-10675 zone in the short term (under bullish
case scenario).**
*On the flip side*, sustaining below 10425 area, NF may fall towards
10375-10325 & 10270-10195 zone in the short term (under bear case scenario).
*Technically, BNF*has to sustain over 25250 area for further rally
towards 25500-25600 & 25775-25950 area in the near term (under bullish
case scenario).
*On the flip side*, sustaining below 25200 area, BNF may fall towards
25000-24800 & 24600-24450 area in the near term (under bear case scenario).
As par early SGX indication, *Nifty Fut (Nov)* may open around 10395, up
by almost 38 points tracking *positive global cues* amid *lower EUR*
*after dovish QE tapering by ECB* yesterday as highly expected coupled
with renewed hopes for a hawkish Fed leadership and US tax reform
optimism; *USD is higher* and a dual combination of lower EUR & higher
USD is good for export savvy Asian & EU markets.
*EU markets*were also upbeat yesterday on lower EUR after dovish QE
tapering scripts by Draghi coupled with signs of truce in Catalonian
tensions; but that may be short lived as Catalan leaders has decided not
to go for an immediate snap election in lieu of separation; Barclays was
also in pressure for muted earnings. FTSE-100 has also gained on lower
GDP amid Brexit uncertainty.
Also, *EUR* may bounce back later today on another trial balloon floated
by ECB that after Sep’18, they may end the QE purchase (APP) completely
by a short tapering from Oct’18 to Dec’18 @20/10/5 BLN EUR/pm, subjected
to satisfactory inflation & other economic conditions.
*USD*was also higher amidreports that Trump may have finally chosen two
candidates for Fed (Taylor & Powell) and Yellen, Warsh, & Cohn are
completely out of race now. Although it’s not final as Trump is changing
his mind almost every day, a possible dual combination of Powell (Fed
Chair) & Taylor (VC) may be more hawkish than Yellen/Warsh. Market is
expecting that Trump will end this Fed suspense before 3^rd Nov, his
long Asia trip.
*USD*got further boost yesterday, after US house clears a step (budget
bill) towards the tax proposal by a narrow margin, paving the way for
the US senate to pass easily the tax reform bill later with a simple
majority, instead of 60 votes; now the text of the draft bill will be
released on 1^st Nov by a senate committee.
*Overnight, US market*closed mixed on earnings push & renewed optimism
about US tax reform legislation, a dovish QE tapering by Draghi and
guidance boost by Twitter & Du-Pont. But higher USD/US bond yields,
hovering above 2.46%, may have also affected the overall US market
sentiment yesterday along with some Biotechs & Healthcare names due to
renewed concern of Amazon led disruptions & some muted report cards.
There were some reports that Amazon has got distribution licenses for
pharma products in a number of US districts. Also, Trump’s tough stance
regarding increasing drug addiction in US (opioid crisis) and declaring
the same as “national public health emergency” has affected the overall
healthcare sector yesterday.
*DJ-30*closed almost 0.31% higher, *S&P-500* edged up by almost 0.13% to
close at around 2560, while *NQ-100* edged down by 0.11%. Market may be
also concerned for earnings trajectory amid mixed Q3 tend so far and
already stretched valuations; so far EPS growth in Q3 is around 5.3% vs
estimate of 8%; prior: double digit growths in Q1/Q2.
*US stock future (SPX-500)*is now trading around 2562, almost flat,
after post market earnings boost by tech trifecta (Amazon, Microsoft,
Google parent Alphabet).
Back to home, *Indian market* (Nifty Fut/India-50) is now trading around
10350, edged down by around 0.10% after opening around 10371; market is
basically consolidating ahead of EU market opening, which may open
around +0.3% in DAX-30 on lower EUR & Catalan truce optimism.
Market may focus on PSBS recaps mechanism as the whole process may be
quite complex and will take significant time to take a complete shape
and its positive effect on economic activity & eventually on earnings of
the PSBS, if any.
Market may also focus of deluge of Q2 earnings; buy repeated NPA
divergence issue of Yes Bank & certain other private banks may also be
creating an environment of trust deficit over their accounting practices
and tendency to hide the potential NPA under carpet. Thus, high
valuation multiple of the private banks may be also relooked by the market.
<https://4.bp.blogspot.com/-hkdEsPteyOA/WfLNBbPFoeI/AAAAAAAANm8/y_D_vL21UJInOk6jAAHG1C7sblNfmlMtACLcBGAs/s1600/SGX-NF-27-10-2017.png>
SGX-NF
--
Thanks & Regards,
Asis Ghosh
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