Market Mantra: 10/08/2017 (09:00)

SGX-NF: 9880 (-32)

For the Day:

*Key support for NF: 9870-9825*

*Key resistance for NF: 9950-10020*

*Key support for BNF: 24400/24250-23900*

*Key resistance for BNF: 24650/24800-25150*

*Hints for positional trading: Strategy-SELL ON RISE*

*Time & Price action suggests that, NF has to sustain over 10020 area for further rally towards 10065-10115 & 10155-10205 in the short term (under bullish case scenario).*

*On the flip side, sustaining below 10000-9940 area, NF may fall towards 9870-9825 & 9765-9705 area in the short term (under bear case scenario).*

*Similarly, BNF has to sustain over 24800 area for further rally towards 25050-25150 & 25250-25500 area in the near term (under bullish case scenario).*

*On the flip side, sustaining below 24750-24650 area, BNF may fall towards 24400-24250 & 23900-23750 area in the near term (under bear case scenario).*

As par early SGX indication, Nifty Fut (Aug) may open around 9880, down by almost 32 points on subdued global/Asian cues amid increasing concern of China tightening after PBOC fixed USDCNY at 6.6770 vs 6.7075 yesterday, much stronger and strongest since late Sep’16; but PBOC also injected a net 30 bln Yuan today.

China may also take some steps to control the soaring steel rebar prices on speculation of tight supply as Govt is closing some jumbo companies, primarily on environment concern & its deleveraging efforts coupled with a fair supply/demand dynamics. As par recent data, China outbound real estate investments has plunged almost 82% in H1CY17, thanks to ongoing regulatory tightening; but it may be a bad news for reflation addicted developed market (DM).

Meanwhile, US rating agency Fitch also predicted slower growth for the Chinese firms in 2018 due to PBOC tightening and deleveraging; growing China bankruptcies & slowing credit may also help to cut the China over capacity.

Thus, all these regulatory tightening aiming at a stable China ahead of its party congress may slow the growth engine of the world and thus it may be a major concern for the world (DM), thriving for inflation/reflation.

Overnight, US market (DJ-30) closed lower (-0.20%), but well off the day low as US secretary Tilerson downplayed Trump’s “Fire & Fury” narratives and instead asked the American citizens to have a good night sleep without any serious geo-political worries over the NK issues. US Gen Kelly also came forward with a soft stance before Trump is able to tweet some more bytes and all these may have helped to pacify the situation and coupled with that, modest/mixed US economic data calmed the storm on USD too!!

Meanwhile, NK is “planning” to hit (test) a place 30-40 kms away from US military base Guam with 4 simultaneous missiles and their army will compete the whole planning within mid-Aug and after that depending on the tone of Trump, NK Prez Kim may order to strike finally; so the whole NK-US rhetoric now seems to be an ideal war Novel rather than any serious stuffs.

NK has also described Trump’s “Fire & Fury” comments as “load of nonsense” and described Trump as a “guy too bereft of reasons for negotiations and only absolute force can work on him” !! Thus, these NK-US geo-political tensions may be a simple “war of words” rather than any serious “war of bullets/nukes” and market may now focus on economics rather than politics ahead of US CPI tomorrow.

Back to home, Indian market may continue its focus on the Shell cos fiasco as more names may be coming from SEBI shortly amid concerns of serious money laundering effort during DeMo. But, Pharma cos may bounce back to some extent today after upbeat report card from Auro Pharma despite a challenging environment for Pharma sector; metals may be under pressure after reports that China may curb down on soaring prices.

Although, the 12 “blue chip” cos suspected as “shell” may be permitted to resume trading shortly, the margin funding crisis of the brokers & the credibility issues of the whole Shell narratives may continue to haunt the Indian market for the time being; technically, 9765 Nifty may be an important support zone for the overall market amid mixed Q1 earnings so far.

Govt may also tighten its war on black money by making the UID mandatory for the Indian capital market.



Thanks & Regards,

Asis Ghosh

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