Market Mantra: 11/08/2017 (09:00)

SGX-NF: 9760 (-118)

For the Day:

*Key support for NF: 9695/9665-9605***

*Key resistance for NF: 9775-9830***

*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 9800-9775 area, NF may fall towards 9695-9665 & 9605-9560 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 scenario).***

*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).***

As par early SGX indication, Nifty Fut (Aug) may open around 9760, almost down by 118 points tracking subdued global cues amid simmering NK-US tensions and China-India border standoff at Doklam. Yesterday, Trump renewed his NK rhetoric again by commenting that his previous “Fire & Fury” reference may not be enough for Kim and NK must get their act together; otherwise things will happen to them, they never thought possible.

In the process, Trump also vowed to increase the US defense budget by billions of dollars in an attempt for increased fiscal spending for the US economy!! But, his defense secretary preferred to take more diplomatic approach to tackle this NK issues, stressing that tragedy of a war well known and that a military conflict could be catastrophic.

NK, on the other side vows to mercilessly wipe out the provocateurs (Trump), saying that US will suffer a shameful defeat!!

Among all these games of war-mongering, China’s stand may be neutral if NK first attacks US military base and US/SK retaliates; but if US & SKcarry out any pre-emptive strikes against NK to overthrow Kim and try to change the current pattern of the Korean peninsula, China may not be silent spectator and will prevent them from doing so.

Thus, all these lingering NK-US geo-political tensions coupled with terrible US PPI data yesterday and some dovish script from Fed’s Dudley is making the USDJPY lower and it plunged below the 109 mark ahead of crucial US CPI data today; appeal of safe heavens of Yen, EUR, Gold has made the risk trade off and moreover a surging EUR is negative for the global stocks in addition of strong Yen and other export heavy Asian currencies.

From the overall NK narratives so far, it seems that Trump may keep his “Fire & Fury” momentum for some more days as it’s very helpful to keep the USD down to make “America Great” and also to divert attention of the core issues of US economy & his failure to peruse legislative agenda like Trumpcare & US debt ceiling issues in addition of poor visibility of Trumponomics rhetoric (US tax reform & fiscal spending).

Overnight, US market (DJ-30) also closed lower around 0.93% down tracking NK tension flare up, terrible US economic data, lower USD and slump in FANG/Tech stocks coupled with some muted earnings. At a glance, SPX-500, which is now trading around 2435 has immediate support of 2420 and sustaining below that 2400 area may be clearly visible as of now.

Back to home, Indian market may be in further stress from the ongoing China-India border stand-off at Doklam, which may take serious turn as some complex geo-political issues and business interest of China is involved there (CEPC-BIMSTEC road connectivity)much to the dislike of India.

Apart from further SEBI “Shelling” and concern of muted/mixed Q1 earnings & stretched valuations, RBI’s dividend to the Govt of around Rs.30656 cr vs expectations of around 1 lakh cr (DeMo profit?) and prior figure of around Rs.65600 cr may be very disappointing and may also cause a big fiscal hole despite upbeat indirect tax collections and improved tax/GDP ratio as a fall out of DeMo.

Overall, keeping in view the May’2019 general theme, Govt may continue its war on black money/corruption narrative by digging more on Shell cos, which may be a perfect vehicle for money laundering and also by linking every financial transaction with UID & GST.

Govt may be extremely right in its approach ethically & morally, but it may not be good for the overall Indian market & economy structure. But again, today’s pain may be tomorrow’s gain; for the time being margin funding issues because of “Shelled cos” may be turning into a serious headwind, especially for the HNI heavily leveraged retail investors/traders.





Thanks & Regards,

Asis Ghosh

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