*Market Wrap: 18/05/2017 (17:00)*
*NSE-NF (May): 9435 (-99; -1.04%) (TTM PE: 23.93; Near 2 SD of 25; TTM
EPS: 394)*
*NSE-BNF (May): 22695 (-236; -1.03%) (TTM PE: 31.17; Above 3 SD of 30;
TTM EPS: 728)*
*For 18/05/2017:*
*Key support for NF: 9415-9360*
*Key resistance for NF: 9465-9535*
*Key support for BNF: 22625-22450*
*Key resistance for BNF: 22725-22900*
*Time & Price action suggests that, Nifty Fut (May) has to sustain over
9535 area for further rally towards 9600-9640 & 9680-9770 in the short
term (under bullish case scenario).*
*On flip side, sustaining below 9515 area, NF may fall towards
9465-9415/9385 & 9360/9310-9280/9240 area in the short term (under bear
case scenario).*
*Similarly, BNF has to sustain over 22900-23000 area for further rally
towards 23075-23200 & 23325-23450 area in the near term (under bullish
case scenario).*
*On the flip side, sustaining below 22850 area, BNF may fall towards
22725-22625 & 22450-22300 area in the near term (under bear case scenario).*
Nifty Fut (May) today closed around 9435, down by almost 99 points after
making an opening session high of 9503 and closing minutes low of 9433
in a risk-off day marred by US political concerns. Indian market today
also opened around 9475, almost 60 points down following “Trump Tremor
aftershock” as a fall out of intervention with FBI (Comey’s)
investigation over the alleged Russian link with his close aide (former
NSA chief).
This is being seen as “obstruction of justice” and an “impeachable
offence” by Trump. Thus, opposition DNC members are calling for Trump’s
impeachment and it seems that even his own RNC members are distancing
from Trump directly or indirectly for all such controversies. Yesterday,
US speaker has indicated that although US congress is supporting Trump
in this hour of crisis, it also want an impartial investigation of the
whole matter and US congress may push its own bill for tax reform,
health care, infra spending, deregulation etc.
After opening gap down today, domestic market tried to recover a bit,
but lack of any meaningful fresh domestic triggers & concerns of
stretched valuation may have limited any significant short covering in
the 1^st half. After EU market opened in a similar subdued note
following “Trumpdump”, it also attempted some recovery; but some reports
from Reuters that “TRUMP CAMPAIGN HAD AT LEAST 18 UNDISCLOSED CONTACTS
WITH RUSSIAN OFFICIALS AND OTHERS CLOSE TO KREMLIN BETWEEN APRIL AND
NOVEMBER 2016” may have affected the global market risk-on sentiment
further and subsequently, Indian market also tumbled more towards the
closing session. Also, amid this ongoing high US political risk, news
that US DOJ has appointed a special prosecutor (Ex-FBI-Mueller) may have
further affected the risk-on sentiment.
Looking forward, ex-FBI chief Comey’s testimony in the US congress &
further development of the impeachment motion by the DNC next week will
shape the US/Global market; for now politics is playing bigger role than
economics and all these US political chaos are making USD/US bond yields
lower in a flight to safety to US TSY bonds, Yen, Gold etc. The whole
idea of “Trumponomics” may be in serious doubt now. Also, recent spate
of soft US economic data may be affecting the overall sentiment and FFR
is now showing only 60% of a June hike probability; Fed may be on hold
in June’17.
In the morning, Japanese GDP data flashed upbeat/better than expected
(2.2%-YOY; 0.5%-QOQ); but a better JP economic data is good for JPY and
it may also help BOJ to taper its huge QQE gradually. Thus, a strong Yen
is making further pressure on the JP market (Nikkei-225). Also Brazilian
political scandal has affected the global market sentiment today.
*Technically, USDJPY (110.75) now need to sustain below 110 area for an
immediate target of 108; on the other side, it may gain some strength
only sustaining above 112.15 area for target of 114.50 in the short term.*
*Similarly, SPX-500 (2350) need to stay below 2340 area for further fall
towards 2285-2265 zone; on the other side, sustaining above 2355-2375
area, it may again target the 2400-2430 area in the short term.*
Amid all these US political chaos, Indian market also suffered some set
back today; but IT scrips limited the downfall. An impeachment for Trump
(?) may be good for IT scrips because of the perception of “Trump Free”
America & his stance of protectionism & “America First” policy. Also,
rally in USDINR, contrary to the global trend may have helped the IT
counters today.
Nifty was dragged by private banks, metals, cements and PSBS counters.
But ICICI bank has recovered some loss because of reports that JPA group
is in the process of debt deal with the JLF (Banks) and may have soon
release some payments to the banks prior to the Ultratech cement deal.
All eyes are also on the two day GST council meeting at Srinagar started
from today. But as par some reports, almost all the states are now
demanding some specific tax rate for some specific commodities as par
their convenience; e.g. Kerala is now demanding 5% tax on Gold. So, the
overall process may be delayed further till there is consensus. Also, as
par some reports that GST council may announce officially Sep’17 as roll
out day instead of Jully’17 because of various challenges in its
implementation. A further delay in GST implementation may be also not
good for the Indian market sentiment.
Looking ahead, apart from deluge of earnings in the coming days, Indian
market may also focus on the GST meet today & tomorrow for a
confirmation about implementation date & various other rules &
regulations. A July or even a Sep’17 roll out may be proved as
disruptive for the economy in the short term, considering the under
preparedness of the stake holders and concerns for input tax credit
transmissions & lower inventories/sales. It may affect the Q2FY18
earnings. Thus GST may be acting as a “double whammy” for the domestic
market sentiment as of now.
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SGX-NF
<https://2.bp.blogspot.com/-8xjDbEip-cI/WR2idqganrI/AAAAAAAALwE/g75C9hBpyfMk5ryJjhOu6PXkHtnWXpkHQCLcB/s1600/BNF-PATTERN-18-05-2017.png>
BNF
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USDJPY
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SPX-500
--
Thanks & Regards,
Asis Ghosh
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