*Market Wrap: 21/04/2017 (19:00)*
*NSE-NF (April): 9130 (-32 points; -0.35%)*
*NSE-BNF (April): 21554 (-3 points; -0.02%)*
*IN 10Y G-SEC: 6.923 (+0.65%)*
*USDINR (Apr): 64.65 (-0.05%)*
*For 24/04/2017:*
*Key support for NF: 9115-9060*
*Key resistance for NF: 9145-9200*
*Key support for BNF: 21450-21300*
*Key resistance for BNF: 21675-21775*
*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 flip side, sustaining below 9180 area, NF may fall towards
9145/15-9085/60 & 9025/8970-8845 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 21775 area for further rally towards
21875-21975 & 22050-22150 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 21725-675 area, BNF may fall towards
21575-21450 & 21300-21150 area in the near term (under bear case scenario).*
Nifty Fut (Apr) today closed around 9130, down by 0.35% after making an
opening minutes high of 9208 & day low of 9090 and closed the week
almost 0.5% lower. Indian market today opened in positive zone following
upbeat US cues & mixed Asian market. Overnight US market closed almost
0.85% higher amid better than expected results some US corporates and
renewed optimism about Trump’s tax cut plan. Also, some dovish statement
by Kuroda (BOJ) about continuing of Japan’s present QQE policy until the
target of 2% CPI has made the USDJPY to spike some extent and that also
helped the SPX-500 (US) & Nikkei (Japan).
But, a terrorist attack in Paris yesterday ahead of election on Sunday
also made the sentiment gloomy and raised political risks for the French
election, because these types of attack may be helpful for the extreme
anti EU & nationalistic candidate (Li Pen) for the 1^st round of
election, day after tomorrow. There will be 2 candidates out of 4 to be
elected from this 1^st round of election to the 2^nd to be held on 7^th
May and market is so far discounting a convincing win for the centrist
candidate, Macron followed by Li Pen. Although, 2^nd round of the French
election will be more vital, any surprise for Li Pen, because of
yesterday’s terrorist attack and some other factors may also cause some
volatility in the market on Monday.
*Technically, SPX-500 (LTP:2350), need to sustain above 2355-2375 area
for more rally towards 2405-2445 zone; otherwise it may correct and
sustaining below 2340-2315 area, may fall towards 2295-2245 zone in the
short to medium term.*
Indian market may have also turned cautious today ahead of French
election on Sunday, keeping in mind the unexpected results from Brexit
referendum & Trump’s election, which may be termed as a “black swan
event”. Although every time market recovered from such “dooms day” low,
courtesy institutional & central banks support, it’s not sanguine,
especially the market is now at stretched valuation after relentless
rally for the last few months and thus investors may have turned
cautious today.
Indian market sentient may have also affected today after RBI/MPC
minutes revealed hawkish stance for the members due to concerns of
higher trajectory of core CPI. Also, two of the members had actually
voted for a 0.25% hike in the last MPC meeting for the 1^st time after
formation of MPC and thus some economists are also predicting a
probability of 0.50% rate hikes in FY-18 and most of them are now
forecasting no probability of a rate cut in the foreseeable future. As
RBI is quite hawkish on inflation & upbeat on growth, the combination of
these two factors may not call for any rate cut in FY-18.
RBI may focus now more on NPA resolution & reorganization (AQR) and
further transmissions of existing rate cuts to the actual borrowers
(transmission from MCLR to base rate). Although, banks has reduced their
MCLR quite significantly after 31^st Dec’16 (PM’s speech), the same may
not be transmitted fully to the base rate at which borrowers are
actually linked.
Also there were some reports that Govt/RBI may review the telecom loans
restructuring mechanism and may hike the standard lending rate by 0.35%
on next renewal with an extension for 15-20 years from the present norm
of 10 years. This may have also made some banks having high exposure in
telecom into pressure today on lingering concerns about health of
telecom sector.
There were also some reports that IMF has warned about India’s debt,
which is among the highest in the EM universe due to environment of
growing protectionism (US & some other DM) & adverse risk premiums,
which may have also limited the initial euphoria in the market today.
Market also turned cautions as Q4FY17 earnings so far may be termed as
mixed to tepid so far in comparison to the high expectations & current
stretched valuation multiples (PE). HDFC bank today reported stable
earnings (slightly above estimates) & asset quality with a 18% growth in
PAT, helped by higher NII; but higher provisions also limited the PAT
growth. Going forward, banks may need to keep the standard RBI
prescribed PCR of 70-75% on an average, which is hovering now around
55-60%. HDFC Bank today closed around 1499 (+2.38%) its life time high
after the upbeat report card and helped the market to a great extent.
Nifty was today also supported by RIL amid optimism about its energy
project execution and better earnings hope for Q4 (result to be
published on 24^th Apr next week).
Market was dragged today by Sun Pharma (ghosts of US FDA), BOB, Wipro
(retrenchment of a significant number of employees for cost
cutting/automation) and other IT counters (concerns for H1B visa
issues), FMG counters (concerns for deficient rains this year?)
Next week, apart from RIL result, market may also focus on host of other
important results from Axis Bank, Kotak Bank, Wipro, Maruti & Ultratech
Cement. At a glance, ACC’s result released today after market hours may
not be termed as upbeat.
<https://4.bp.blogspot.com/-WjYXyQBKH58/WPodv2LmFII/AAAAAAAALbM/iLHBNhtQ8PoqPJXaKhl0ltfYHHpTRyc9gCLcB/s1600/SGX-NF-PATTERN-21-04-2017.png>
SGX-NF
<https://2.bp.blogspot.com/-QyuHjxTj0nk/WPod06PXS1I/AAAAAAAALbQ/lVrtegRdN282edCgMuEREZ8o4hDcGLnqQCLcB/s1600/BNF-PATTERN-21-04-2017.png>
BNF
<https://2.bp.blogspot.com/-rOVwK5uM_Xk/WPod5wL58nI/AAAAAAAALbU/HNqRxbAcSVgoTcQ_uZHSfJ073IGFriwlwCLcB/s1600/SPX-500-PATTERN-21-04-2017.png>
SPX-500
--
Thanks & Regards,
Asis Ghosh
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