*But Indian Market Recovered Quite Smartly Today At Closing Hours From
Day’s Low After SAT Put On Hold SEBI Order Partially & Unconfirmed
Reports Of China Troops Pull Back From Doklam*
*NSE-NF (Aug):9878 (-49; -0.49%) (TTM PE: 24.86; Nr. 2 SD of 25; Avg PE:
20; TTM EPS: 395; NS: 9820)*
NSE-BNF (Aug):24364 (-259; -1.05%) (TTM PE: 30.46; Abv 3 SD of 30; Avg
PE: 20 TTM EPS: 795; BNS: 24217)
*Key support for NF: 9800/9755-9705*
*Key resistance for NF: 9950-10020*
*Key support for BNF: 24250/24090-23890*
*Key resistance for BNF: 24500-24700*
*Hints for positional trading:*
*Time & Price action suggests that, NF has to sustain over 9830 area for
further rally towards 9895-9950 & 10020-10065 area in the short term
(under bullish case scenario).*
*On the flip side, sustaining below 9800 area, NF may fall towards
9755-9705 & 9665-9605 area in the short term (under bear case scenario).*
*Similarly, BNF has to sustain over 24500 area for further rally towards
24700-24850 & 25050-25150 area in the near term (under bullish case
*On the flip side, sustaining below 24450 area, BNF may fall towards
24250-24090 & 23890-23790 area in the near term (under bear case scenario).*
Nifty Fut (Aug) today closed around 9878, down by almost 49 points
(-0.49%), but well off the day’s low of 9804; earlier it has made an
opening session high of 9920.
Indian market (Nifty Fut/India-50) today opened around 9895, almost flat
& down by 17 points on subdued global/Asian cues amid increasing concern
of China tightening coupled with ongoing geo-political tensions ranging
from NK-US to China-India-Bhutan tri-junction disputed LOC at Doklam
(Sikkim) coupled with fear of more “Shelling” from SEBI.
But, soon after opening weak, the Indian market nosedived further today
after some attempt of failed recovery. There was unconfirmed news that
Indian army has ordered a village near Doklam area to vacate and a large
troops of soldiers from the Sukna (Siliguri-WB) army camp are on their
way to the Doklam LOC area and China may be also readying itself for a
“minor” military conflict in that controversial area.
All these may have ignited the selling spree of the Indian market today,
which was already under pressure from SEBI’s “Shell cos” action and
concern of stretched valuations on mixed/muted Q1 earnings so far.
But, the market made a smart recovery (short covering) at the closing
hours after news that SAT has given a temporary stay order on appeal
against Prakash Ind & J.Kumar Infra in the SEBI “Shelling” matter. These
are two of the dozen “blue chip” cos surprisingly under SEBI/MCA “Shell
cos” list on serious allegations of money laundering during times of
DeMo, using their fictitious “cash balance” shown in the B/S.
Although, this “Shell” matter may go now to the SC eventually, as SEBI
will challenge the jurisdiction of SAT over its ruling as par previous
SC order, SEBI for the time being may allow the trading of these two
particular cos from tomorrow as par SAT direction.
There was also some unconfirmed media report that both China & India has
agreed for partial withdrawal of troops from the Doklam LOC to their
earlier positions around 250 mts away. Thus, the market may have able to
close with minimal loses today.
Looking ahead, 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 allegations during DeMo. But, Pharma cos today
attempted to bounce back to some extent after upbeat report card from
Auro Pharma despite a challenging environment; 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. Govt may also tighten its
war on black money by making the UID mandatory for the Indian capital
Technically, 9755 area in Nifty may be an important support zone for the
overall market amid mixed/muted Q1 earnings so far; for any recovery, it
need to sustain over 9950-10025 zone in the coming days. Time & price
may be indicating a preliminary indication for “death cross” between 10
& 20-DEMA; if such trend continues, then we may have “bigger death
cross” in the days ahead.
Pharma counters again came under pressure today at the closing session
after news that German Pharma regulator has not renewed a key DRL
factory; but IT (INFY/TECHM/WIPRO) today supported the Nifty on bounce
back of USDINR; also LT & Kotak bank were in demand today. Overall,
healthcare, auto and banking stocks dragged the market today.
Tata Motors is under huge pressure today after disappointed/mixed report
card, primarily a victim of cross currency headwinds; it has also
confirmed no JV with VW today. Also, SBI, HDFC, RIL, BOB and cement
counters has contributed significantly for the slump in Nifty today.
Overall, advance/decline ratio was terrible at around 1:10 and basically
bears were in rampage for the last few days on “Shell order” by SEBI.
*EU market*was also under pressure tracking NK & China concern and mixed
earnings. A strong EUR because of terrible US PPI data & NK related
flight to safety may be also affecting the overall market sentiment. NK
issues somewhat lingering even today despite down playing by US State
Sec as SK & Japan has warned NK if it go ahead with its “planned Guam
attack”. Geo-political tension may be also flaring up as US sent a war
ship within striking distance of China’s disputed sea territory, an
artificial island built by them.
EU Stoxx-50 is now trading almost 0.70% down with DAX/FTSE/CAC all are
down around 0.80/1.20/0.32%. FTSE is in good pressure because of some
recovery in GBPUSD, thanks to some upbeat UK economic data today.
*Globally*, almost all the major Asian markets are now trading in red
amid simmering NK geo-political issues and 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.
As par some reports, 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
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 state secretary Tillerson 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 remote 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
NK has also described Trump’s “Fire & Fury” comments as “load of
nonsense” and narrated 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.
In fact, Japan & Korea, the most risky nations out of these NK conflicts
has brushed off any imminent crisis and also downplayed the whole “Fire
& Fury” rhetoric of Trump.
Dovish scripts from two of the known Fed doves (Bullard & Evans)
yesterday, stressing importance for the Fed’s 2% CPI target before going
on for further rate hikes may not be surprising for the market at all;
but Evan’s tacit acknowledgement that Fed may start/announce B/S
tapering and may delay the Dec’17 rate hike on subdued inflation
concerns may be notable.
In that sense, today’s US PPI & tomorrow’s CPI may be vital; although
Fed may be reluctant to go for double QT in Dec’17 (QE/BS tapering &
rate hike) and in that scenario, may also take the excuse of sustainable
core US inflation above 2%, which is so far elusive and may also remains
so due to structural issues in employment & wage growth of US labour
market (globalization, automation etc).
Thus, Fed as well as other major G-10 central banks (BOJ/ECB) may be
also realizing that the 1980’s model of inflation stimulation will not
work in today’s age of automation & globalization despite relentless QQE
and this may be the primary reason behind the illusion of 2% inflation
in the DM.
Subsequently the global central banks are slowly changing their stance
admitting defeat in inflation or stimulation of economy (GDP) by only
monetary stimulus and thus giving greater emphasis on the
A recent poll also suggests that both ECB & BOJ may announce QE tapering
in the months ahead with their changed inflation target of 1.5%.
Elsewhere, *Australian market* (ASX-200) has closed almost flat around
5760 (-0.10%) helped by some fall in AUDUSD on China tightening concern
and general dovish stance on regional commodity currencies after RBNZ
tried to talk down the NZD by even mentioning an imminent “intervention”.
AU shares were today affected by energy & financials on mixed earnings,
but being helped by airlines & organic baby food maker after upbeat
As expected, *RBNZ* today kept its rate (OCR) at a record low of 1.75%
with a dovish bias (dovish hold); but despite its best effort, RBNZ
statement looks less dovish than expected, but overall it may be
successful to simply talk down the NZDUSD, which is now trading around
0.7278, down by around 1.10%; technically, the pair may be now on its
way to 0.7235-0.71240, given the scale of verbal intervention to stem
the strength of the currency, which is primarily a by-product of
euphoric carry trade like AUD.
Overall, RBNZ stance may be neutral as it’s seeing low & falling NZ
inflation as transitory and the economy simply does not need any
monetary stimulus at this time; lower NZ inflation may be a structural
*Japan (Nikkei-225)*also closed almost flat around 19730 (-0.05%) on
mixed earnings & some USD recovery; but JP market today was dragged by
Disney after its restructuring plan looks unimpressive and fails to
convince investors/analysts. Noodles maker Nissan also dragged the
market today after publish of its below expected result.
Overall, JP economic data today may be mixed with terrible core
machinery orders, but upbeat PPI for July at 2.6% against estimate of
2.4% (prior: 2.1%) on YOY basis; on MOM basis PPI flashed as 0.3%
against estimate of 0.2% (prior: 0%).
*China (SSE)*is trading around 3261, down by almost 0.42% on increasing
concern of regulatory tightening & a strong Yuan, affecting China’s
export edge also to some extent as PBOC is on a deleveraging drive
coupled with simmering NK tensions & “war of words”.
*Hong-Kong (HKG-33)*is also trading in deep red around 27440, down by
almost 1%, but off the early morning low tracking subdued earnings and
China concern. But HK market today was helped significantly by Wanda
Hotel Development, which is up by over 24% on its restructuring plan.
Meanwhile *Oil (WTI)* is trading around 49.75, up by almost 0.45% on
hopes of a faster rebalancing after mixed inventory report (surprised
crude drawdown, but unexpected surge in gasoline inventories) amid
summer driving season; recent NK tensions flare up may be also helping
Crude oil to some extent as USD also goes down.
A full blown military conflict involving NK may be positive for Oil as
it will also involve Iran & other OPEC-NOPEC producers including Russia;
bur such probability may be now next to nil.
Asian session update
Thanks & Regards,
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