*Market Wrap* <https://www.iforex.in/news>: 05/01/2018 (17:00)
NSE-NF (Jan):10578 (+52; +0.49%)
(TTM PE: 27.00; Abv 2-SD of 25; TTM Q1FY18 EPS: 391; NS: 10559; Avg PE:
20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):25661 (+165; +0.65%)
(TTM PE: 29.53; Near 3-SD of 30; TTM Q1FY18 EPS: 867; BNS: 25602; Avg
PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
*For 08/01/2018: Jan-Fut*
*Key support for NF: 10605/10575-10525/10485*
*Key resistance for NF: 10675/10725-10795/10815*
*Key support for BNF: 25500/25200-25000/24800*
*Key resistance for BNF: 25700/25900-26100/26250*
*Trading Idea (Positional):*
*Technically,*Nifty Fut-Jan (NF) has to sustain over 10675 area for
further rally towards 10725-10755/10795 & 10815-10860 zone in the short
term (under bullish case scenario).
*On the flip side,*sustaining below 10650 area, NF may fall towards
10605/10575-10525 & 10485-10425 zone in the short term (under bear case
scenario).
*Technically,*Bank Nifty-Fut (BNF) has to sustain over 25900 area for
further rally towards 26100-26250 & 26325-26615 zone in the near term
(under bullish case scenario).
*On the flip side,*sustaining below 25850-25700 area, BNF may fall
towards 25500-25300/25200 & 25000-24800 area in the near term (under
bear case scenario).
*Indian market*
<https://www.iforex.in/analysis/nifty-jumped-rbis-green-signal-extra-dividend-govt-47561>(Nifty
Fut-Jan/India-50) today (5^th Jan) closed around 10578, jumped by 52
points (+0.49%) and closed at another record high mirroring similar
global trend
<https://www.iforex.in/news/europe-may-open-almost-flat-higher-usdeur-global-growth-optimism-47511>
after late hour reports that RBI has given “green signal” for extra
dividend to Govt (in the long disputed issue of DeMo led windfall profit
to the central bank- narrative of Demonetized currency notes, which have
not returned to the RBI, thereby reducing B/S liabilities of RBI).Nifty
(spot) gained around 0.2% for the 1^st week of 2018 and scaled a record
high of 10566.
As par reports, Govt had sought Rs.0.13 tln as “additional dividend”
(DeMo profit) from RBI; the central bank may pass it to the Govt as
additional “trading income” on account of its FX & bond portfolio and
close this issue; RBI does not recognize any DeMo profit, but a B/S
treatment of assets & liabilities.
It seems that Govt is in dire need of additional funds for the sake of
fiscal discipline amid subdued revenue collection and higher capex, PSBS
recaps & surging oil. So far RBI has transferred around Rs.0.31 tln
surplus profit to the Govt for FY-17 vs Rs.0.66 tln for FY-16.
Shortfall of RBI dividend is one of the major headwinds for Govt’s
fiscal slippages this year; RBI profit plunged due to additional expense
for DeMo led currency notes management. Govt has already communicated to
borrow additional Rs.0.50 tln for FY-18 and thus “additional dividend”
of Rs.0.13 tln by RBI may help the Govt to prune fiscal deficit.
Indian market today opened around 10550, edged up *following global
Goldilocks & extended New Year rally
<https://www.iforex.in/news/europe-may-open-almost-flat-higher-usdeur-global-growth-optimism-47511>
on global growthoptimism
<https://www.iforex.in/news/asia-soared-synchronized-global-growth-optimism-japan-surged-26-yrs-high-47533>*;
but overall sentiment may be cautious on higher oil as Brent is hovering
around $68, which is a serious headwind for Indian macro; Indian market
made a opening session low of around 10536 & late day high of 10582
after a days of range bound trade.
Indian bond yield fell to 7.28% from earlier 7.34% after news of RBI
additional dividend; but still significantly higher on concern for
fiscal slippages; as par reports, PSBS recaps bonds by the Govt may
offer interest as high as 7.75% to attract investors to participate in
PSBS recaps. As PSBS recaps news is now almost discounted, market will
now focus on fiscal math and corporate lending recovery & any subsequent
boost to private capex, which is still muted for various reasons.
Indian market sentiment today may have also boosted by a Fitch report
that India may be the fastest growing economy over next 5 years
(2017-22) at an annual average rate of 6.7% against China’s 5.5%.
For 2017 Fitch has predicted India’s GDP growth as 6.4% citing GST/DeMo
spillover effect and then gradual pick up to 7.3-7.6% (2018-19) on
proper implementation of these structural reforms aided further by
favourable demography, PSBS reaps & subsequent expected revival of
corporate lending.
As par Fitch, the key risks to its forecast may be poor access of proper
education to certain section of the economy and stagnant private capex,
which could derail productivity & overall investment growth for the
Indian economy.
Today Nifty was supported mostly by Yes Bank (UID enabled PIN less
ATM/Debit card) HDFC, Bajaj Fin, Adani Ports, Indusind Bank, Bharti
Airtel, TCS, Eicher Motors, ITC & RIL by almost 52 points altogether.
Nifty was dragged mostly by IOC, Bharti Airtel, ICICI Bank, SBI, Infy,
HPCL, Hindalco, UPL, ONGC & BPCL by around 18 points cumulatively.
Overall, today Indian market was helped by selected private banks &
financials (fall of bond yields after RBI indication of additional
dividend to the Govt & Fitch optimism about Indian GDP), automakers,
FMCG, selected techs, media, metals (global & domestic growth optimism),
pharma, reality, infra & consumer staples, while dragged by PSBS
(concern of EQ dilution after recaps & various hurdles for NPA
resolution through NCLT), OMC (higher crude oil and not being able to
pass the same).
On the broader market, liquor stocks soared on solid earnings from GM
Breweries, IFCI jumped on deleveraging news, RCOM surged as China
Development Bank withdraws its IBC/NCLT petition, Bharat Forge rose on
upbeat North America truck sales, IOB soared on bank’s plan to adjust
its accumulated loses of Rs.0.08 tln with its share premium accounts
(recaps money), Idea roared on fund raising plan & analyst optimism.
BTCUSD
<https://www.iforex.in/news/bitcoin-soared-coinbase-denial-include-ripple-gdax-47547>:
USDJPY
<https://www.iforex.in/news/usdjpy-jumped-decent-us-wage-growth-despite-terrible-nfp-headline-47553>:
<https://2.bp.blogspot.com/-jGnbPmYhuT8/WlJShSy765I/AAAAAAAAOag/xnOLv7gcpCMOZg29hQAC6WOHPUTJZ7bAACLcBGAs/s1600/SGX-NF-PATTERN-05-01-2018.png>
SGX-NF
<https://2.bp.blogspot.com/-VQhtoOnFmZg/WlJSkXw5BUI/AAAAAAAAOak/6WBfVBCamXkDff37R3CYalIE_57Y5Oy1gCLcBGAs/s1600/BNF-PATTERN-05-01-2018.png>
BNF
<https://3.bp.blogspot.com/-RyorIK2N7-I/WlJSq56F_XI/AAAAAAAAOao/l4irkeDRkTg9ttP5djRDcnSgjD417jlTgCLcBGAs/s1600/USDJPY-PATTERN-05-01-2018.png>
USDJPY
--
Thanks & Regards,
Asis Ghosh
TWITTER.COM/ASISIIFL
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