*Market Wrap: 29/03/2017 (19:00)*
*NSE-NF: 9151 (+41 points; +0.45%)*
*NSE-BNF: 21411 (+176 points; +0.83%)*
*For 30/03/2017:*
*Key support for NF: 9115-9075*
*Key resistance for NF: 9195-9235*
*Key support for BNF: 21350-21150*
*Vital resistance for BNF: 21500-21675*
*Time & Price action suggests that, Nifty Fut (March)/Nifty Spot has to
sustain over 9195 area for further rally towards 9235-9275 & 9350-9425
BY tomorrow / in the short term (under bullish case scenario).*
*On the other side, sustaining below 9175 area, NF/NS may fall towards
9115-9075 & 9035-8980 area by tomorrow / in the short term (under bear
case scenario).*
*Similarly, BNF/BNS has to sustain over 21500 area for further rally
towards 21675-21750 & 21850-21950 area by tomorrow / in the near term
(under bullish case scenario).*
*On the other side, sustaining below 21450 area, BNF/BNS may fall
towards 21350-21150 & 20950-20700 zone by tomorrow / in the near term
(under bear case scenario).*
Nifty Fut (March) today closed around 9115, rallied by another 0.45%
after making a last minute high of 9151 and an opening session low of
9119. Domestic market today opened in a positive zone after overnight
rally in US market (+0.73%) amid better than expected & upbeat US
consumer confidence data. Also, there was renewed optimism about passage
of the health care bill in some modified form as a compromise by Trump
with his DNC oppositions & RNC dissidents. Market is also very hopeful
that tax reform bill being a different issue altogether, eventually
Trump will be able to pass it.
Amid positive US cues and some concern over “Real Brexit”, Indian market
today got support from the ongoing talk of an effective & quick
resolution about the huge banking NPA. The market is basically looking
for a big bang announcement by the Govt for a super ARC or bad bank to
address the NPA issue.
But, going by different commentary of the policymakers, Govt may
initially focus on the big 40-50 corporate stressed accounts (NPA/NPL)
primarily in the infra sector involving around Rs.4.80 tln NPA (i.e.
around 70% of the present declared NPA by the banks) and will try to
address the same by either some bad bank idea or by some modification of
the existing CDR rules. A decision may be arrived at the scheduled
meeting between bankers & policymakers by this week. Most probably, Govt
may not go for a big bad bank creation at this point of time and instead
may modify the current CDR norms as par suggestions by the banks to
lower the NPA provision requirements and repair the stressed banking
balance sheet of the PSBS. Govt may also encourage the inevitable M&A
not only within PSBS, but may also permit with some private bankers
having “animal spirit”.
Govt’s response for the “too big to fall” NPA issues involving the
maximum stressed accounts may benefit SBI, PNB & Axis, ICICI bank, if
the same is resolved in a meaningful way; otherwise it may be the same
“band aid” treatment and not a “big surgery”.
Although, today after market hours, Kotak Bank promoter delivers nothing
against huge market expectation of a M&A “bazooka”, some of his post
presser comments may also be very interesting about M&A consolidation in
the banking space. Apart from eyeing the Axis Bank SUUTI stake sale from
the Govt in the coming days, Kotak may be also interested for some
fragile PSBS M&A with itself or some other strong private banking group
as beside huge capital, a good management is also required for most of
the ailing PSBS. As Govt is now has huge political support, it may think
such strategy to integrate some of the fragile PSBS with some private
banks as next banking reform (privatization of some of the PSBS) after
cleaning up of the stressed assets to a bad bank !!
Indian market today also got some support after Govt tabled the GST bill
for discussions & passage in the LS, being a money bill. As expected,
the bill will be passed and GST may be also implemented from July’17;
but some experts and stakeholders are still not so much confident about
a smooth July’17 roll out and considering all the pros & cons, they are
advocating for a Sep’17 roll out of the same. A hurried launch from
July’17 may be more disruptive, considering the final shape of GST will
be ready only by May’17 after fixation of rates of the different
products and in that scenario, time & IT preparedness may be a challenge
for its proper implementation; business/industry & also the
administration may not be prepared for such hurried launch of the GST.
Considering all the uncertainties, Govt may also confirm a “firm date”
of 1^st Sep’17 in lieu of 1^st July’17 for GST roll out for the time
being. Govt may even prefer for further debates & discussions about GST
structure among the stakeholders and may also defer it to 1^st April’18,
considering so many regulations & complexities.
Indian market sentiment was affected today by some extent after SC gave
a “jolt” to the automakers on the BS-III vehicles issue. No BS-III
vehicle will be sold & registered after 31^st March’17 and auto
manufactures has huge stock of around 8 lakh vehicles (4W+3W+2W) lying
unsold ether at company or dealer ware houses. It seems that apart from
Bajaj Auto and to some extent Maruti, most of the auto cos may be
severely affected, some of them equivalent to one QTR PAT. Today’s SC
verdict may have also far reaching implications on the auto industry as
a whole, considering their unpreparedness about BS-IV/V upgradation and
also lack of corresponding fuel availability in India. But SC gave a
priority to clean public health (less pollution) over inventories/sales
issues of BS-III vehicles (auto co’s loss). After 2G & Coal/mining case,
it may be another jolt to the concerned auto industry, although they
were aware of the dead line of BS-III. Govt may also have to ensure
adequate availability & supply of BS-IV fuels.
Globally, all eyes now may be on the official EU response after UK
triggered the “Real Brexit” button today as expected. As par some leaked
version, initial EU response may be soft (conciliatory) rather than a
hard one; but lots will depend upon the actual negotiation process
later. Both UK & EU need to soften their respective stance on the issue;
otherwise it may be a hard Brexit for UK rather than a soft one.
Initially, the market may react according to the EU’s stance of granting
a free trade zone for UK in the EZ for these two years of negotiations
and the issue of a “Brexit Fee”. Much will depend upon the UK’s stance
of allowing other EU nationals (immigrants) in UK, which may be the core
theme apart from the economic independence theme behind the Brexit
referendum last year.
UK, being the 2^nd largest economy in the EU universe and the financial
capital of the same, its importance may be immense and market is
basically expecting for a compromise solution beneficial both for the UK
& EU at this point of time. Thus the market is calm hoping for soft
Brexit stance from the EU & UK. But it’s still too early and if the
trend of future negotiations will indicate for a hard Brexit, then GBP
will further weaken, which may not be good for the UK economy as a
whole, considering incremental inflationary pressure on account of a
weak currency despite some other benefits and weak wage growth, tepid
consumer confidence & GDP; it will be a stagflation like scenario.
*Technically, GBPUSD (LTP: 1.2443) has to sustain over 1.24 area for
further bounce back towards 1.28-1.31 & 1.35-1.40 area under soft
Brexit; otherwise sustain below 1.2365 area, it mayagain fall towards
1.21-1.18 & 1.14-1.10 zone in the short to midterm in the event of a
hard Brexit negotiations.*
For the Indian cos having significant exposure in UK, like Tata Motors,
apart from general Brexit related uncertainties, cross currency
headwinds may be a bigger challenge in the coming days.
Oil is another factor, which is supporting the “risk on” trade today on
the talk of an extension of the OPEC & Non-OPEC production cut agreement
beyond June’17.
<https://3.bp.blogspot.com/-EPDQ03TX2M4/WNvOaqAmseI/AAAAAAAALGY/W6foLRk3GR0GK6FKbfMH5MPq0NIJPT_tACLcB/s1600/NF-PATTERN-29-03-2017.png>
NF
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BNF
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GBPUSD
--
Thanks & Regards,
Asis Ghosh
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