*Market Wrap: 21/03/2017 (19:00)*
*NSE-NF: 9155 (+1.45 points; +0.02%)*
*NSE-BNF: 21110 (-73 points; -0.34%)*
*Vital support for NF: 9105-9035*
*Vital resistance for NF: 9195-9275*
*Vital support for BNF: 21000-20900*
*Vital resistance for BNF: 21400-21500*
*Time & Price action suggests that, Nifty Fut (March) has to sustain
over 9235 area for further rally towards 9275-9350 & 9425-9550 for
tomorrow/ in the short term (under bullish case scenario).*
*On the other side, sustaining below 9215-9195 zone, NF may fall towards
9140-9105 & 9075-9035/8995 area for tomorrow/ in the short term (under
bear case scenario).*
*Similarly, BNF has to sustain over 21400 area for further rally towards
21500-21675 & 21855-21950 area for tomorrow/ in the near term (under
bullish case scenario).*
*On the other side, sustaining below 21350-21250 area, BNF may fall
towards 21000-20900 & 20800-20600 zone for tomorrow/ in the near term
(under bear case scenario).*
Nifty Fut (March) today closed around 9155 almost flat after a moderate
day of volatility in which it made an opening minutes high of 9172 &
subsequent session low of 9114 and respected the 10-dema (9105 as of now).
The Indian market today opened in a positive tone following brightening
prospect of a July’17 GST launch after union cabinet yesterday cleared
the four GST bill. The sentiment was further boosted in the morning
Asian session after liberal candidate Macron looked more convincing than
the extreme rightist candidate Li-Pen (anti EU) in a televised election
debate in France.
As of now, Macron is leading with around 20% than its prime rival
Li-pen, which has also diminished the French election risk to a great
extent and consequently global/EU market sentiment was also boosted and
that helps the Indian market to recover from some loses at the last hour
of trading today.
But, overall sentiment of the domestic market was somehow tepid today
after another incident of import alert by US FDA on Divis Lab, some
product approval issues with DRL and a product pricing case in USA with
Sun Pharma. Overall, going by the repeated actions by US FDA on Indian
Pharma companies, analysts are quite worried about the future prospect
which may be uncertain and considering strict quality control criteria
(CGMP) of the US FDA, these Pharma companies may have to incur
substantial cost/capex to improve its standards/protocol, if they want
to do business in USA. At the same time, other foreign drug regulators
may also take similar action like US FDA and thus going ahead,
market/investors might have less confidence on the Pharma sectors as
their earnings may be severely affected.
Another area of concern is Indian banking space, specially the PSBS and
some old private banks (ICICI, Axis). Apart from the ongoing concern
about farm loan waiver rhetoric by BJP in UP, analysts are also worried
about their tepid loan growth, which in turn may affect earnings
adversely in the coming quarters. Also, other new generation private
banks like Indusind, Yes, Kotak may not be able to grow at perpetual
25-30% CAGR years after years and there may be stagnation in the face of
growing competition and lack of sufficient eligible & quality retail
borrowers.
Yes bank was also down today by around 2% after market buzz of its QIP
at steep discounted price for around 1350/-, which was previously
cancelled last year after some controversy (poor response?); although
the banks has denied today any decision regarding its QIP. After big
merger between different SBI groups with its parent (SBI), various
private banks may be also exploring some idea about M&A like in telecom
spaces and Kotak bank may be in the forefront.
Idea was again down today to 93 after yesterday’s epic fall from around
123 as confusion regarding intrinsic valuation of the merged entity with
Vodafone is going on. As par some analysts, ideal valuation may be
somewhere between 90-110, and as par the merger math with Vodafone, it
may be around 72; thus investors are quite confused considering the
stock’s consolidated EPS (Q3FY17 TTM) of around 1.40 and an industry
(telecom) average PE of 20; even considering the future bright prospect
(?) of the merged entity and an expanding PE of 40 & an EPS of 1.50-1.60
by FY:18-19, fair valuation might be around 62; in FY-17, it may report
an EPS of around 0.05 as par present trend.
Overall, merger between Idea & Vodafone might be an obligation to
counter R-Jio’s deep pocket and aggressiveness, but it may take
significant time till FY-19 for the actual merger and operational
synchronization and its effect on the earnings. Vodafone may be making a
backdoor entry with Idea for its listing in India, but considering
Vodafone’s conservative marketing policy and inertia, even the combined
entity may not pose any serious problem for R-Jio or to even Bharti
Airtel, unless Vodafone changed its marketing policy. Also lack of
sufficient 4G spectrum may be another headwind for this merged entity.
Indian market today was pre-occupied the D-Mart IPO listing which scored
a maiden century on its D-day itself, gaining by more than 117% at
around 650/- against IPO price of 299/-. But, analysts are quite worried
about the valuation, which may be highly expensive at an projected FY-17
EPS of around 8.35, which is translating of a PE around 78 at today’s
high of around 650/-.
Projected FY-18 EPS of D-Mart may be around 11.20 and at 650, projected
FY-18 PE may be also stretched at around 58. But, the company may be
also an exception in the organized retail format, which is growing
around 35-40% CAGR for the last few years, whereas Future retail with an
EPS of 7.12 is commanding a PE of around 35 (industry PE of around 40).
Considering saturation in growth and conservative management & the
euphoric investor sentiment, a median PE of 50 may be appropriate for
D-Mart as of now and in that scenario, a median valuation of around
417-560 (8.35*50 & 11.20*50) may be ideal for D-Mart in the coming days
(Projected For FY: 17-18 at consensus EPS).
*The euphoric sentient about D-Mart IPO may be also an indication of the
extreme greed level of the Indian market currently which may be another
sign that market may be topping out and technically also, the corrective
4^th wave may have started in the EW cycle, provided Nifty sustained
below 9275 in the coming days; otherwise the expansive current 3^rd wave
may further extend towards 9505 zone.*
*As reflation trade theme is gradually diminishing in US/global markets
amid fall in USD and uncertainty over Trumponomics & supply glut/fall in
Oil, probability of an impending time & price correction of the Indian
market may be more from here.*
<https://4.bp.blogspot.com/-4glvivVd2UA/WNFIOkJp5SI/AAAAAAAAK_M/zwg0o9xWb2gF8NEHRgzFXdI8GItUV0o0QCLcB/s1600/SGX-NF-PATTERN-21-03-2017.png>
SGX-NF
<https://3.bp.blogspot.com/-08cqJFYuGoU/WNFISMAEVyI/AAAAAAAAK_Q/JUNMmkPom10JfSLjqyNamO4r_RKz5uI-gCLcB/s1600/BNF-PATTERN-21-03-2017.png>
BNF
--
Thanks & Regards,
Asis Ghosh
--
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