*Market Wrap <https://www.iforex.in/news>*:
<https://www.iforex.in/news>*04/04/2018*
*
*
*NSE-NF (April):10139 (-146; -1.42%)*
*
*
*NSE-BNF (April):24125 (-473; -1.92%)*
*
*
*Valuation metrics:*
*
*
*NS: 10128; Q2FY18 EPS: 410; Q2FY18 PE: 24.70; Avg FWD PE: 20; Proj
FY-18 EPS: 418; Proj Fair Value: 8360*
*
*
*BNS: 24129; Q3FY18 EPS: 820; Q2FY18 PE: 29.43; Avg FWD PE: 20; Proj
FY-18 EPS: 961; Proj Fair Value: 19220*
*
*
*For 05/04/2018:*
*
*
*Updated: 07:50*
*
*
*SGX-NF: 10285 (+146; +1.44%)*
*
*
*Expected BNF opening: 24475 (+1.45%)*
*
*
*(Gap up opening after a late monster rally in US market in which it
ended up in 1% higher from earlier 2% plunge on hopes that the US-China
trade war would be limited to only “war of words” and end up in
negotiation rather than retaliation/implementation)*
*
*
*March-Fut (Key Technical Levels)*
*Support for NF:***
*10240/10210-10150/10100-10030/9985-9945/9880*
*Resistance to NF:***
*10300/10330-10385/10405-10465/10500-10545/10600***
*Support for BNF:***
*24475/24325-24225/24100-23950/23850-23600/23300*
*Resistance to BNF:***
*24725/24775-24900/25100-25300/25500-25850/26075*
*Technical View (Positional):*
*Technically, Nifty Fut-March (NF) has to sustain over 10330 for a
further rally towards 10385/10405-10465/10500-10545/10600 in the short
term (under bullish case scenario). ***
*On the flip side, sustaining below 10300 NF may fall towards
10240/10210-10150/10100-10030/9985 in the short term (under bear case
scenario).***
*Technically, Bank Nifty-Fut (BNF) has to sustain over 24775 for a
further rally towards 24900/25100-25300/25500-25850/26050 in the near
term (under bullish case scenario).***
*On the flip side, sustaining below 24725-24625, BNF may fall towards
24475/24325-24225/24100-23950/23850 in the near term (under bear case
scenario).***
*The Indian and global market story
<https://www.iforex.in/analysis/nifty-tumbled-terrible-global-cues-after-chinas-tit-tat-tax-plan-us-and-ongoing-icici-bank-saga-50709>on
04/04/2018:*
The Indian market (Nifty Fut/India-50)closed around 10139 on Wednesday,
tumbled by almost 1.42% on terrible global cues amid fears of a
full-blown trade war after China retaliate US with tit-for-tat tax
coupled with an ongoing saga about ICICI bank loan scam with Videocon.
Nifty Fut-I made an opening session high of around 10304 and closing
hour low of 10121 before settling at 10139 for the day.
The Indian market was also cautious about RBI policy stance on Thursday
as the central bank may go for a hawkish hold and signal for a hike in
late 2018 amid higher trajectory of core inflation and growth and global
tunes of QT (quantitative tightening).
On Wednesday, Indian market was initially boosted by the prospect of a
normal monsoon this year as predicted by Skynet but was not able to hold
the gain on negative global cues after China hits back the US with
retaliatory tariffs.
China, on Wednesday very quickly announced the list of 106 US products
worth about $50 billion that will be subject to an additional 25% tariff
in retaliation for the US tariffs on $50 billion worth of Chinese
hi-tech goods subject to tariffs for alleged IP violations. Although the
market was expecting such China retaliation, additional tax on soybean
and aircraft was unexpected at this point in time and thus risk-on trade
plummeted on the concern of a full-blown trade war.
*ICICI Bank fiasco may be the tip of the iceberg:*
*
*
The Indian market sentiment was further affected by the widening impact
of ICICI bank fiasco after an influential BJP/RSS (ruling party) leader
(Swamy) blasted the ICICI bank CEO for nepotism in the Videocon case and
called for an immediate resignation of the CEO. This may be an indirect
signal from the government for the ICICI bank CEO to resign immediately
on the ground of conflict of interest and pave the way for an impartial
investigation by various government agencies.
As par Swamy, Indian banks are working like a cartel, irrespective of
public or private sector banks. In the particular case of ICICI bank and
Videocon group, the later was given huge loans by the ICICI Bank based
on recommendations from Avista, a reconstructing concern promoted by one
of the close family member/relative of the CEO (Spouse’s brother). Thus,
it’s important for the government/regulator to set a strong example to
prevent a repeat of such actions.
As par some reports, there are several other stressed firms like JP
group, Suzlon which were provided loans by ICICI bank brokered by Avista
for a service charge of 5% of sanctioned loans. Thus there is the angle
of huge corruption with not only ICICI Bank, but also for the whole
consortium of banks involved in such corporate lending mechanism.
Notably, almost 75% of the corporate loan of Rs.25 tln was given by the
public sector banks and around Rs.3 tln was written off and out of that
almost 90% is not recoverable now. As par the government, overall,
Rs.9.50 tln is now locked up in NPAs and 50% of PSBS loan exposure has
now turned into NPA, which is quite worrisome.
The government is also actively considering raising FPI limit on the
Indian bonds (GSEC) and proposed three options to the RBI (6/7/8% of
outstanding bonds from present 5%) as a slow and steady increase to fund
its fiscal deficit.
On Wednesday, Nifty was helped by Tata Motors, Eicher Motors, HUL, Bajaj
Finance, Hero Motors, ITC, Adani Ports and some others by total around
13 points, while dragged by HDFC Bank, L&T, HDFC, Kotak Bank, Infy, Axis
Bank, VEDL and some others by almost 125 points cumulatively.
Overall, the Indian market was helped by automakers, mixed FMCG,
Chemicals & Fertilizers (forecast of a normal monsoon and its positive
effect on the rural & agri economy) while dragged by banks and
financials, techs (lower USD), media, metals, pharma, reality,
consumption, energies and infra stocks. In brief, selling was quite
broad-based and solid.
*Global cues turned terrible during Indian market hours on Wednesday:*
*
*
On Wednesday, during Indian market hours, global cues turned terrible.
US stock future (SPX-500) was sharply lower by 1.50% as China very
quickly retaliated to the Trump administration's announcement late
Tuesday of the list of $50 billion worth of Chinese products subject to
tariffs for IP violations. The Euro Stoxx-50 index was down 1.27%.
China's retaliation was announced after some of the Far East Asian stock
markets had already closed, which means that some of the Asian stock
markets close do not reflect the news. The announcement was made about
20 minutes before the Hong Kong stock market closed, accounting for
Wednesday’s plunge in the Hang Seng index by -2.19%. As a reminder,
Hong-Kong market will be closed on Thursday, while China is closed for
the week, both on Thursday and Friday.
Other Asian closes: Japan Nikkei index +0.13%, China Shanghai -0.18%,
Australian S&P 200 +0.16%, Singapore -2.12%, South Korea KOSPI 200
-1.54%, India -1.05%. Indian market reflects the China retaliation along
with Hong-Kong, Singapore.
China early Wednesday very quickly announced the list of 106 US products
worth about $50 billion that will be subject to an additional 25% tariff
in retaliation for the US tariffs on $50 billion worth of Chinese
goods. The list of US products subject to the new tariff includes
soybeans, automobiles, chemicals, and aircraft. Other US agri products
subject to the tariff include wheat, corn, cotton, sorghum, tobacco, and
beef. The US sold about $14 billion worth of soybeans to China last year
accounting for about 33% of the entire US soybean crop.
Notably, Boeing's stock was sharply lower by -7% in overnight Globex
trading since the tariffs will apply to at least some Boeing jets.
About 25% of Boeing's aircraft sales deliveries last year were to China.
Boeing's sharp drop accounts for the larger drop in Dow futures prices
on early US Wednesday.
China said the implementation date for the tariffs will depend on when
the US levies its tariffs. The US process is that there will be about a
60-day public comment period and then the US Trade Representative has up
to 6 months to decide on the final tariffs. Written public comments can
be submitted until 11^thMay and a public hearing has been scheduled for
15^th May.
That means there is still time for the two sides to negotiate to see if
there is a compromise that could avert the tariffs. Thus, hopes of
negotiation rather than an outright retaliation/implementation may have
supported the risk-on sentiment to some extent in the later part of the day.
Earlier, China has forced into a big $9.7 billion bailout of Anbang
Insurance Group to save the company from insolvency after the government
recently accused Anbang's former Chairman Wu with fraud for financing
the company with unauthorized investment-type policies.
On early Wednesday, Asia traded somewhat indecisive as the region failed
to take full impetus from the rebound on Wall St, where all major
indices recovered lost ground and reprieve for tech stocks pushed the
Nasdaq back into the green YTD. There was a report that Trump’s Amazon
war is a mere rhetoric and there are no active policy change discussions
in the White House regarding the Amazon issue.
ASX 200 and Nikkei 225 initially caught a tailwind from the momentum
stateside and both opened higher, but then failed to hold on to the
gains as trade concerns lingered after the US announced its proposed
China tariff list. This was met with condemnation from China which is
also said to be planning reciprocal tariffs of equal scale and strength
(intensity).
Conversely, Hang Seng was choppy and Shanghai shrugged-off the trade
tensions and disappointing Caixin service PMI data, to trade with a
positive tone ahead of the extended weekend for the mainland and
following reports of a $9.7 bln bailout for Chinese conglomerate Anbang
Insurance. Chinese Caixin Services PMI (Mar) came as 52.3 vs. Exp. 54.5
(Prev. 54.2), while Caixin Composite PMI (Mar) came as 51.8.
Meanwhile, markets have been shaken up amid China’s most recent
tit-for-tat tariff announcement on 106 US products. As a result,
European equities have slipped firmly into the red. The tech sector
opened softer following US President Trump proposing a tariff list on
China consisting mostly of tech products. Industrials and materials have
edged lower amid fears of a lag in global growth as trade disputes
escalate. Energy and utilities are the only sectors in the green.
*USDJPY
<https://www.iforex.in/news/usdjpy-skids-china-sneezes-and-plans-fresh-trade-retaliation-against-us-50681>STORY:
<https://www.iforex.in/analysis/usd-tumbled-china-fights-back-us-tariffs-very-quickly-50695>*
*EURUSD STORY:
<https://www.iforex.in/news/eurusd-edged-plunge-us-dollar-china-fires-back-us-retaliatory-tariffs-50693>*
*OIL/WTI STORY:
<https://www.iforex.in/news/oil-edged-down-mixed-inventory-report-and-concern-us-china-trade-war-50701>*
<https://4.bp.blogspot.com/-ffkuaX0jp0Q/WsWz1k_dLeI/AAAAAAAAPi0/cVUcXLS_ClACo_z_XjDB-JGvU2cd63FQwCLcBGAs/s1600/SGX-NF-PATTERN-04-03-2018.png>
*SGX-NF *
<https://1.bp.blogspot.com/-3bkbr7F-xek/WsW0D_V8epI/AAAAAAAAPi8/f-SAJXm3vQYN9zzoWz3PxudPJkfBIqp4QCLcBGAs/s1600/BNF-PATTERN-04-03-2018.png>
*BNF*
*
*
<https://2.bp.blogspot.com/-N27fxcFuSM8/WsWz-iLv41I/AAAAAAAAPi4/-Gu1q9djn8U_peraOjKTuuEML9DssUzmACEwYBhgL/s1600/SPX-500-PATTERN-04-03-2018.png>
*SPX-500*
-- Thanks & Regards, Asis Ghosh
--
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