-------- Forwarded Message --------
Subject: Nifty Adds 14 Points After A "Mini Diwali Rally" Amid Tepid
Global Cues Ahead Of US GDP
Date: Fri, 28 Oct 2016 19:03:31 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
*Market Wrap: 28/10/2016 (17:30) *
Nifty Fut (Nov) today closed around 8669, almost flat (+0.16%) after a
brief swing (Diwali) rally from the opening session low of 8605 to day
high of 8682. On a weekly basis, Nifty closed almost 55 points down
marked by the "Cyexit" event.
*Looking at the chart, for next week, NF need to sustain above
8695-8725* area for further rally towards 8760-8800/8830*-8875 zone in
the immediate to short term.*
*On the other side, sustaining below 8665-8625* area, NF may further
fall towards 8600-8540*-8500/8465 zone in the immediate to short term.*
Indian market today opened lower (-43 points) on the back of weak global
cues marked by mixed/poor earnings (especially Amazon) and blood bath in
bonds. USD was strong amid upbeat US economic data ahead of US GDP today.
Market is expecting US GDP as 2.5% (prior 1.4%) and anything above this
may make USD more strong and in that scenario, dollar index can break
the level of 99 towards 101 level, which may make "risk trade" more
vulnerable. On the other side, if US GDP will print around 2%, then USD
can fall good and we may have a brief "relief rally" too.
Although, some analysts are attributing higher US GDP this time on the
back of consumer spending and capex, some experts do also believe that
tepid consumer sentiment and retail sales has a significant downside
risk for the same.
Another important global event was that, a Northern Ireland High Court
today declined to interfere in the Brexit issue citing that such "high
policy matters are out of their judicial review", which practically
paves the way for a smooth real Brexit. The next legal hurdle will be at
the British High Court, but it’s now widely expected that the British
High Court may also take the same view. As a result, GBP dropped well
and that's made the USD stronger. & global market may not be fully
discounted yet for the "Real Brexit too !!
Early morning Asian sentiment was further subdued today as BOJ-Kuroda
preferred some hawkish script in his testimony before Japan parliament
and emphasized for more structural reform from the Govt rather than too
much dependence on monetary stimulus. As par some reports, Kuroda may
not get extension after his terms ends this year.
Overall, apart from the high probability of Dec rate hike by Fed, USD is
getting stronger across G-10 currencies because of divergent monetary
policy and various geo-political risks in EU (Brexit,
French/German/Denmark election, Scottish referendum, EU/Italian banking
crisis and Grexit). This may be one of the primary reason for increasing
spreads between German & US bond yields despite recent set of upbeat
economic data (EU).
Oil was also down as market is not so confident about OPEC's ability for
the proposed production cut/freeze in reality. Also, as oil is now
hovering around $50, many "offline" oil producers are coming "online",
specially Shell oil cos, on which OPEC has no control either, which may
make the rebalancing in demand & supply more tough in the days ahead.
All eyes will be on the technical meeting this weekend among OPEC &
Non-OPEC countries (Russia) to work out the final modalities scheduled
to take concrete shape next month.
As par latest Russian jawboning, they may "freeze" the production at the
present level only (almost at life time high), but not "cut" the same.
Among all these "usual global headwinds", Indian market today opened
lower, but it covered almost instantly and gave a "Mini Diwali" rally of
around 75 points from the low of the day, primarily inspired by some
short covering or value buying (??) for the "deep discounted" Tata group
of shares, specially Tata Motors & Tata Steel and some incremental
reforms buzz by the Govt (in FDI space).
After huge public spats over the "Cyexit", which has caused nearly
Rs.26000 cr of notional wealth of the investors in the last few trading
days of blood bath, Tata group today decided for some damage control.
Tata today assured the market that the present deleveraging strategy in
Tata Steel UK is intact and they are also calling for a "Global Investor
Meet" (Tata Day) shortly to convince the investors about the "letter
bomb" & $18 bln "hotspots" as thrown by disgruntled Mistry.
There was also a positive news/confirmation about Tata Steel that Quebec
Gov is taking 18% stake in its Canada Iron Ore project (although it was
previously known).
Another report was that, Govt is planning to relax the FDI rules in
several areas, including retail, information & broadcasting sector for
more capital inflows and "ease of doing business" in India, which may
also helped to improve some market sentiment today.
But, increasing tension at Ind-Pak border may have also dented the
market sentiment as its now turning quite serious & provocative and may
be described as a "virtual mini war" just before Diwali Festival and US
election in two weeks. As the nation is preparing for a blistering
"Diwali" with fire crackers, soldiers at the border are playing with
“real fires”.
Also, the ongoing Q2 result season may have failed to convince the
market so far as most of the results are “at par/slightly above market
expectation” coupled with similar types of guidance. As the mid-cap
valuation is quite expensive, market may not be so much enthusiastic for
fresh long from here as there are no fresh domestic drivers.
Apart from the ongoing global cues and geo-political issues, Indian
market may now focus more on the current earning session, progress of
GST (finalization of rate) and budget preparations.
<https://4.bp.blogspot.com/-4LidzKlwrGo/WBNSMbPyxII/AAAAAAAAJSI/f1aVAtTwqE0lzAbddvZfiJeN2EwjtrePACLcB/s1600/SGX-NF-EW-28-10-2016.png>
SGX NF
--
Thanks & Regards,
Asis Ghosh
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