Market Mantra <https://www.iforex.in/news>: 21/09/2017 (09:00)
SGX-NF: 10140 (-29)
For the Day:
*Key support for NF: 10150-10090*
*Key resistance for NF: 10205-10250*
*Key support for BNF: 24900-24800*
*Key resistance for BNF: 25150-25250*
*Hints for positional trading:*
*Technicals indicate that, NF has to sustain over 10205 area for further
rally towards 10250- 10325 & 10385-10455 area in the short term (under
bullish case scenario).*
*On the flip side, sustaining below 10185 area, NF may fall towards
10150/10130-10090 & 10050-10000/9970 area in the short term (under bear
case scenario).*
*Similarly, BNF has to sustain over 25150 area for further rally towards
25250-25350 & 25585-25785 area in the near term (under bullish case
scenario).*
*On the flip side, sustaining below 25100 area, BNF may fall towards
24900-24800 & 24650-24500 area in the near term (under bear case scenario).*
As par early SGX indication, Nifty Fut (Sep) may open around 10140, down
by almost 29 points tracking mixed global cues after hawkish hold by Fed
yesterday. As par expectations, Fed will start its BS tapering from
Oct’17 onwards @10 bln/pm and hold the rate for the time being; but it
forecasted a stronger dot-plot for the Dec’17 rate hike probability with
three more hikes in 2018 and two hikes in 2019.
Higher dot-plots for Dec’17 rate hike coupled with Yellen’s hawkish
stance yesterday shrugging off the economic damage of US hurricanes,
subdued inflation has caught the market on wrong foot and USD soared;
basically Yellen looks & sounds more hawkish than market expected.
Fed Chair also termed the persistent lower inflation in US despite a
tight labour market & decent wage growth as “Mistry” and also
acknowledged indirectly about the theory of automation, globalization &
other structural issues for the subdued US inflation. Thus, Fed has no
issue in joining the global chorus of QT (Quantitative Tightening) and
thus Asian market may be nervous for this Fed/global central banks
deleveraging, although a higher USD may be good for the export heavy
Asian & EU markets.
But after Fed turned unusually hawkish, market may be now also convinced
that it’s now really a matter of time, ECB will also join the global QT
bandwagon and announce a definitive QE tapering plan next month; a lower
EUR because of hawkish Yellen yesterday may also provide Draghi a much
needed space to announce the inevitable ECB monetary policy
normalization. FFR is now showing around 65% probability of a Dec’17
rate hike move against 45% prior to Fed meet yesterday.
*Overnight US market*edged higher after initial slump on the back of
financials as higher USD/US bond yields are favourable for their
business model, although a higher USD may not be good for the overall US
market, for their export earnings & the perception of higher imported
inflation. Techs/FANG stocks dragged the market coupled with utilities,
consumer staples, & other rate sensitive sectors.
Apple also dragged the US market yesterday on disappointing i-Phone8
pew-booking numbers and some technical issues with the new models &
i-Watch. DJ-30 closed almost 0.19% higher, while S&P-500 was almost flat
(+0.06%) and tech heavy NASDAQ dropped by 0.08%.
US Stock Fut (SPX-500) is now trading around 2506, almost unchanged on
mixed global/Asian cues after a hawkish script by Yellen yesterday.
Back to home, *Indian market* (Nifty-Fut) after opening down has gone
further lower to around 10072 till now on concern of a hawkish Fed;
although a higher USD may be good for the export heavy Nifty index
(Pharma, IT), it may be not good for the overall Indian economy, being
an import oriented country.
Also, a higher USD may not be a good news for the Indian corporates’
BS/debt profile as they have taken heavy debt from various
external/foreign sources; it may not be a good news for banks/RBI also
as further rate cuts hopes may be diminished in the face of hawkish Fed.
A global QT may be also a bad news for the overall FPIS & also FDI
inflows for India.
<https://4.bp.blogspot.com/-jqxOmQYaTVE/WcNODDldZXI/AAAAAAAANL0/pBL9z8ZsGF4cfpqHk-Vy7Y3WwFeOtBQBACLcBGAs/s1600/SGX-NF-21-09-2017.png>
SGX-NF
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Thanks & Regards,
Asis Ghosh
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