*Nifty closed almost flat (+0.29%) for the week marked by mixed
earnings, GST/ITC & Global Central Bank induced volatility*
Market Wrap: 21/07/2017 (17:00)
NSE-NF (July): 9911 (+23; +0.23%) (TTM PE: 25.09; Near 2 SD of 25; Avg
PE: 20; TTM EPS: 395; NS: 9911)
NSE-BNF (July): 24255 (+20; +0.08%) (TTM PE: 30.51; Near 3 SD of 30; Avg
PE: 20 TTM EPS: 795; BNS: 24257)
For 21/07/2017:
*Key support for NF: 9865-9830/9810*
*Key resistance for NF: 9960/9985-10005*
*Key support for BNF: 24250-24000*
*Key resistance for BNF: 24350-24500*
*Hints for positional trading:*
*Time & Price action suggests that, NF has to sustain over 10005 area
for further rally towards 10050-10115 & 10195-10250 in the short term
(under bullish case scenario).*
*On the flip side, sustaining below 9985-9960 area, NF may fall towards
9905/9865-9830/9810 & 9775- 9715 area in the short term (under bear case
scenario).*
*Similarly, BNF has to sustain over 24350 area for further rally towards
24500-24700 & 24875-25050 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 24300 area, BNF may fall towards
24150/24000-23900 & 23750-23500 area in the near term (under bear case
scenario).*
Nifty Fut (July) today closed around 9911, up by almost 23 points
(+0.23%) after an volatile trading session, which brought the index to a
day low of 9833 and from there it made a smart recovery to a high of
9920, helped by positive global cues (some fall in EUR tracking subdued
inflation forecast by ECB professional forecasters) and ongoing forced
P-Note related FNO short covering coupled with rally in RIL & Wipro.
Indian market today opened around 9900 (Nifty Fut), in slight green
tracking subdued global/Asian cues, but supported by upbeat report card
from RIL & Wipro yesterday after market hours. But soon after opening in
positive tone, it succumbed to selling pressure after RIL announced
various sops related to its telecom venture (R-Jio) and even a 1:1 free
bonus for its share holders at its AGM today.
As par some reports CAG has founded huge revenue under reporting from
several Indian telecom firms for the FY: 11-15 and all these has
affected the telecom sector today. R-Jio has also launched digital data
cable TV and thus the listed cable TV firms (Dish/Sun TV) has also
succumbed.
There were also some reports that Govt may change its FY from this year
itself (from April-March to Jan-Dec) and apprehension about presenting
the FY-19 budget by Nov’17 (another market/economy disruption?).
Also, some of the earnings released today may be quite subdued and among
them,Ashoke Leyland may be also affected the overall market sentiment
being a MHCV manufacturer, it’s an indication of underlying tepid core
economic activity; although the management is quite upbeat for Q2 on the
back of GST & Govt capex benefit.
But some positive news such as Govt is finalizing the stake
sale/privatization of Air India & BEML in the last hour of trade may
have also supported the Indian market sentiment today. But Govt has also
confirmed no intention to sell the SBI stake as of now.
In a significant development after market hours today, Essar Oil has
announced that the $13 bln deal with the Russian firm Rosneft has been
approved from the Govt in all aspect and the deal will be complete by
this month; previously the deal was stuck at Indian home ministry level,
citing security/defence issue of the Pak border port Vadinar.
This may be a good news for the Indian banks having huge exposure to the
stressed Essar group, currently under NPA/IBC cases; Essar may pay back
those banks (SBI, ICICI, Axis etc) 50-55% of their overall exposure.
But whatever be the narratives, Indian market is now being bought at
every dips because significant short positions may be still trapped in
the system courtesy forced P-Note FNO short covering and the epic NSE
tech disruption on 10^th July, after the SEBI notification.
Nifty was today supported by Wipro (+6%; upbeat Q1 report card, but
subdued guidance), RIL (+4%; upbeat Q1 report card; strong petchem
margin & retail sales and R-Jio optimism); ZEEL, Kotak Bank & other IT
packs (TCS/INFY/HCL Tech).
Nifty was today dragged by Idea, Bharti Airtel (R-Jio telecom
disruption), Lupin/Sun Pharma (US FDA concern) & HDFC Duo.
*Globally, *most of the major Asian markets were almost flat today
tracking subdued global/Asian cues after surge in EUR despite Draghi’s
best effort to sound like a dove, considering the currency strength,
which may hamper the export driven growth of the EZ economy.
But, Draghi’s indirect hints of QE tapering discussions yesterday may
have ignited the EUR, although EUR bunds has not reacted adversely so
far, keeping the yields almost flat; as par latest BBG report, ECB may
consider QE tapering signal in its Oct meet, if not in the Aug Jackson
Hall Symposium. Thus, the overall impact on the risk assets (EQ) market
may be quite limited today.
Overall, Draghi may be slightly pessimistic about tepid EZ inflation,
but was very optimistic about growth & economic prospect (robust
recovery of EU economy); thus ECB may be slowly shifting from
accommodative/neutral to normalization/tightening mode and will
gradually provide more signals to the market going ahead.
It now seems that ECB may follow Fed’s actual path of QT/QE tapering,
which is expected to start from Sep’17 if there is no terrible US
economic data or political event (like Trump impeachment); if Fed indeed
starts or provide a definitive indication of QE tapering, then ECB may
be bound to follow and it may be further turn out to be a global
coordinated QT (Fed starts the QE first and it will also end first; rest
will follow).
*Overnight US market* (DJ/US-30) also closed almost flat (-0.13%),
dragged by the strong EUR and ongoing US political tensions with Trump
and dragged by retails/consumption shares, but supported by Tech & some
M&A news. Overall, double digit earnings growth hopes may be also
supporting the US market sentiment right now.
As par reports, now Trump may be investigated over his business, various
financial dealings and also a huge DB bank loan all linked with Russia
apart from the election meddling issue.
Another WAPO report was that Trump may try to pardon himself, his family
and all the stakeholders related to this Russian issue as par his
Presidential power!!. Thus, politics may take greater role than
economics for the US/global market in the coming days, which may also
force the Fed to be in the sideline.
*Elsewhere,* Australian market (ASX-200) closd around 5723, almost down
by 0.70% despite plunge in AUDUSD today amid some dovish jawboning by a
RBA member undermining the neutral rate of 3.5% issue; but still AUDUSD
has gained almost 1% for the week and coupled with that strong AU job
data may be affecting the prospect of AU exports as despite dovish
jawboning by RBA today, market may be expecting an imminent rate hike.
Japan (Nikkei-225) closed around 20010, down by 0.22% on strength of Yen
and also affected by energy shares.
China (SSE) closed in red around 3237 (-0.23%) tracking subdued global
cues despite a net injection of 40 bln Yuan today; so far PBOC has
injected 510 bln Yuan this week against last week’s figure of (-) 70 bln
Yuan (drain out); month end tax related outflow issues may have
prompting the
PBOC to infuse some liquidity in the system in order to kept it neutral
as par its prudent monetary policy aiming at gradual deleveraging of the
Chinese economy. Fall in iron ore prices may have also affected the
China & AU market today.
Hong-Kong, South-Korea was almost unchanged on the weekend. Oil was also
trading almost flat around $47 (+0.15%) ahead of US oil rigs data (Baker
Huges) and Monday’s meet between OPEC-NOPEC producers at Russia;
although probability of further deep production cut may be remote.
*Gold* is trading around $1248, up by almost 0.30% on weak USD and
ongoing US political tensions; it’s also being supported by huge
physical demand from China, Hong Kong and India; although India’s sudden
demand surge may be related to seasonal (marriage & festive seasons) and
GST related (exceptional one time demand) as tax has been increased from
1% to 3%.
*Looking ahead, Gold has to sustain over 1250-1260 area for further
rally towards 1275-1295 area; otherwise it may fall again 1235/1214-1205
area.*
<https://3.bp.blogspot.com/-eMH3YuUA4ts/WXIyWSTtmVI/AAAAAAAAMcY/le0iPxCvozA1xb-S23CO4wHDY3SjUENzQCLcBGAs/s1600/SGX-NF-PATTERN-21-07-2017.png>
SGX-NF
<https://3.bp.blogspot.com/-99SBKam6vfc/WXIyZcKH_iI/AAAAAAAAMcc/sOCG5z9lLlkAxtVGM0_UJBstMVhdi6czgCLcBGAs/s1600/BNF-PATTERN-21-07-2017.png>
BNF
<https://1.bp.blogspot.com/-tAg_6spVYS0/WXIygoHsdVI/AAAAAAAAMcg/HIXKGPcSBBsdEd28gJCjnoaiwIpH_QG7ACLcBGAs/s1600/GOLD-WK-21-07-2017.png>
GOLD *
*
--
Thanks & Regards,
Asis Ghosh
--
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