*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:***


*Resistance to NF:***


*Support for BNF:***


*Resistance to BNF:***


*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>*






-- Thanks & Regards, Asis Ghosh

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