*Market Wrap: 18/04/2017 (19:00)*
*NSE-NF (April): 9116 (-52 points; -0.57%)*
*NSE-BNF (April): 21710 (+8 points; +0.04%)*
*IN 10Y G-SEC: 6.862 (+0.22%)*
*USDINR (Apr): 64.70 (+0.19%)*
*For 19/04/2017:*
*Key support for NF: 9085-9025*
*Key resistance for NF: 9200-9275*
*Key support for BNF: 21675-21500*
*Key resistance for BNF: 21775-21875*
*Time & Price action suggests that, Nifty Fut (Apr) has to sustain over
9200 area for further rally towards 9255-9310 & 9375-9425 in the short
term (under bullish case scenario).*
*On the other side, sustaining below 9175 area, NF may fall towards
9115-9085 & 9025-8970 area in the short term (under bear case scenario).*
*Similarly, BNF has to sustain over 21825 area for further rally towards
21875-21975 & 22050-22150 area in the near term (under bullish case
scenario).*
*On the other side, sustaining below 21775 area, BNF may fall towards
21675-21615 & 21550-21425 and further to 21325-21150 area in the near
term (under bear case scenario).*
Nifty Fut (Apr) today closed around 9116, down by 0.57% after making a
day high of 9247 & low of 9115 and slipped quite dramatically from the
day high zone in the afternoon session, on the back of market rumour of
a snap election in UK and tepid monsoon forecast by IMD, which later
came true.
Indian market today opened almost flat amid mixed global cues following
lingering geopolitical tensions over NK-US and a slump in iron ore
prices in China. But, domestic market recovered quickly after opening
flat, may be on the optimistic GDP projections by the World Bank
yesterday. Banks, especially PSBS were in demand on the hopes of an
earnings recovery and reports of more PSBS consolidations after SBI
merger; though it’s still at very preliminary discussion stage. Market
is expecting an effective resolution of stressed assets & consolidation
of PSBS in the coming days and along with that, hopes of a good Q4FY17
report card may be the prime reasons for such strength in Bank Nifty,
although looking quite stretched valuation.
IMD today forecasted 96% of LPA for June-Sep’17 monsoon (normal range
96-104% of LPA-89 cms) with 50% probability of El-Nino in Aug’17 and
termed it as “normal”. But, the prediction is itself at the lower end of
the LPA and may be also termed as tepid/cautious and thus the market was
not convinced. Although, IMD predicted a probability of increased Indian
Dipole event to precipitate any El-Nino in June-Sep’17 time period,
market may be apprehending a deficient rainfall this year as predicted
by the private weather forecaster (Skymet). Going forward, actual
distribution of the monsoon rain may be more important than the overall
quantum.
Meanwhile, towards the closing of Indian market hours, UK announced an
unexpected snap election to be held on 8^th June’17. The announcement of
the sudden general election by UK PM may be influenced by the recent
surge in approval rating (opinion polls) and is basically designed on
the “Brexit” issue. After Brexit referendum and subsequent invocation of
Article-50 & uncertainties of a hard or soft Brexit, this election may
also add further uncertainties on the overall geopolitical risks for UK
& EU.
But, this election may be also used as a confirmation of Brexit
referendum as there are still significant decent among general public &
various policymakers of UK regarding this Brexit episode. If there is
any unfavorable verdict against Brexit & the conservative party led by
UK PM (May), the same may be used as an excuse for no Brexit at all !!
Thus, GBPUSD is gaining strength after initial fall and now trading
around 1.2730. *Technically, GBPUSD has to sustain over 1.28-1.30 level
for further rally towards 1.36-1.45 zone; otherwise it may again fall
and sustaining below 1.25-1.23 area, may again target 1.20-1.18 in the
short to medium term.*
Sudden strength in GBP has made the FTSE lower, which is so far a
beneficiary of a weak currency. Also, the increasing political risks &
uncertainty across the EU (Brexit, UK election, France election next
week, favourable referendum for Turkey’s current Prez, who is being seen
as “anti EU”) has made the global sentiment as “risk off”.
Also, geopolitical tensions over NK-US may be dragged on further amid
“war of words” between the two countries despite various efforts are
being made by China for a peaceful solution. As par some reports, NK may
be gearing itself for a Nuke war and Russia may be also deploying
missiles at NK border in anticipation of an imminent US attack on NK !!
Today Fed VP (Fischer) also downplayed any “taper tantrum” like in 2013
for Fed’s balance sheet (QE bonds unwinding) and that may be also
responsible for some weakness in the USD at EU session, which is another
reason for “risk off”. Contrary to earlier perception of a safe heaven,
now USD is being seen as a risk or reflationary currency. But various
geopolitical tensions involving US with Syria, NK, Afghanistan and
legislative chaos within Trump’s administration may be now diverting the
perception of “Trumponomics” and USD is under great pressure. Also,
Trump’s effort to talk down the USD and recent spate of disappointing US
economic data (tepid core CPI & consumer spending) may be also
responsible for USD/US BOND YIELD weakness.
After market hours today, RBI announced some policy measures for
increased provisioning (PCR) even for standard assets and increasing
monitoring for telecom loans, which may be negative for PSBS. Overall Q4
TCS result may be also termed as very tepid and below/at par market
expectations.
IMF also predicted tepid GDP growth for India in FY-18 as 7.2% on the
back of DeMo/full ReMo concerns, stressed banking assets (NPA), PSBS
recapitalization issues, tepid loan growth, issues of stressed
corporates, and lack of vital policy / reforms implementations in a time
bound manner (GST/Land & Labour bill). IMF sees FY-17 GDP at 6.8% and
FY-19 GDP at around 7.7% as DeMo effect will gradually subsidize.
Tomorrow, all eyes may be on the IIB & Yes Bank result after poor show
by the IT bigwigs (Infy & TCS). An upbeat report card from Gruh Finance
yesterday may have also raised a great hope for financials & banks for
their Q4 earnings. Some of the real estate shares were in good demand
today amid reports of deleveraging and subsequent investment by angel
investors in the commercial segment. Metals were also strong initially
after reports of close down of some aluminum plants in China as a part
of consolidation & environment concern.
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SGX-NF
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BNF
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GBPUSD
--
Thanks & Regards,
Asis Ghosh
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