*Market Wrap <https://www.iforex.in/news>*:
*NSE-NF (April):10545 (+55; +0.53%)*
*NSE-BNF (April):25539 (+120; +0.48%)*
*SPX-500: 2678 (+22; +0.81%)*
*Market Mantra: 17/04/2018*
*SGX-NF: 10535 (-11; -0.10%)*
*Expected BNF opening: 25300 (-0.10%)*
*SPX-500: 2686 (+4; +0.16%)*
*(Flat opening on positive global cues amid Syrian relief rally, US &
Japanese political jitters and mixed China economic data/GDP/IIP/Retail
sales amid ongoing trade war tensions with the US)*
*March-Fut (Key Technical Levels)*
*Support for NF:***
*Resistance to NF:***
*Support for BNF:***
*Resistance to BNF:***
*Support for SPX-500:*
*Resistance to SPX-500:*
*Technical View (Positional-Nifty, Bank Nifty, SPX-500):*
*Technically, Nifty Fut-I (NF) has to sustain over 10575 for a further
rally towards 10610/10635-10675/10725-10765/10815 in the short term
(under bullish case scenario). ***
*On the flip side, sustaining below 10555 NF may fall towards
10490/10450-10400/10350-10280/10260 in the short term (under bear case
*Technically, Bank Nifty-Fut (BNF) has to sustain over 25500 for a
further rally towards 25655/25775-25850/26050-26150/26300 in the near
term (under bullish case scenario).***
*On the flip side, sustaining below 25450-25350, BNF may fall towards
25150/25050-24950/24800-24600/24400 in the near term (under bear case
*Technically, SPX-500 now has to sustain over 2705 for a further rally
towards 2730/2750-2765/2785 in the near term (under bullish case scenario).*
*On the flip side, sustaining below 2695, SPX-500 may fall towards
2675/2645-2630/2605-2580/2545 in the near term (under bear case scenario).*
*Nifty-50: 10528; Q2FY18 EPS: 410; Q2FY18 PE: 25.68; Avg FWD PE: 20;
Proj FY-18 EPS: 418; Proj Fair Value: 8360*
*Bank Nifty: 25321; Q3FY18 EPS: 820; Q2FY18 PE: 30.88; Avg FWD PE: 20;
Proj FY-18 EPS: 961; Proj Fair Value: 19220*
*The Indian and global market story on 16/04/2018:*
The Indian market (Nifty Fut/India-50)closed around 10546 on Monday,
soared by almost 0.53%*on positive global cues
Syrian relief rally and hopes of RBI relief for NPA/NCLT provisions,
rate cuts and a normal monsoon this year. Nifty-I made an opening minute
low of 10431 and a closing session high of 10549 in a late day rally
amid a day of moderate volatility. FMCG, automobiles, housing finance
companies cheered the buzz of a normal monsoon.
On Monday, IMD forecasts normal monsoon (97% of long-term average) for
2018 with a very low probability of a deficit. Thus India is getting a
normal monsoon for the 3^rd consecutive year despite some threat of
La-Nina/neutral IOD conditions currently and a high probable El-Nina
condition during the monsoon season. Monsoon rain may swing 5% in either
way from the forecast. In 2017, the Indian monsoon was around 95% of
“The country is likely to see normal monsoon rains, though there’s a
threat from an anomalous warming in the Indian Ocean”, the India
Meteorological Department (IMD) said on Monday.
As par reports, the Indian government is exploring the possibility of
some NPA provisions relief for the MSME sector under NCLT rules. After
DeMo and GST blues, stringent NCLT/NPA rules may be another disruption
for the MSME sector, which have a huge contribution for the employment
and the government, is concerned that due to stringent NPA/NCLT
resolution issues, many MSME may force to shut down abruptly, causing
mass unemployment in the economy.
Thus the government does not want to take any “unemployment” risk,
especially in the election year and may extend an additional time by
another 180 days for NCLT resolution over the prescribed 180-day limit.
Also, the relaxation of 1-day default period of NPA is under active
discussion. Banks, especially the public sector banks may benefit from
this as it will delay the NPA provisions. The government will have to
provide less capital (recaps) to the public sector banks also.
Meanwhile, the Indian government is quite confident that the economy
will clock GDP growth of around 7.5% in FY-19 and 9% (8.5-9.5%) average
growth by 2018-2022. The market also got some boost after Surjit Bhalla,
an influential member of the Prime Minister’s Economic Advisory Council
said that although the RBI continues to be in a wait and watch mode as
its top priority is to keep inflation under check, improving economic
fundamentals may lead to rate cuts in the months ahead.
Meanwhile, data shows that Indian WPI inflation for March edged down to
2.47% from 2.48% against an estimate of 2.58% on Y/Y basis on lower food
but higher fuel inflation, while WPI manufacturing inflation also edged
down to 3.03% from 3.04%. The lower WPI inflation may have also boosted
the market sentiment on Monday.
Elsewhere, an analysis of the Business Optimism Index in the country
conducted by Dun and Bradstreet reveals that the business sentiment is
down owing to trouble at leading banks and clampdown on certain lending
practices.; in brief recent spate of Bank frauds has affected the Indian
business sentiment significantly.
Althoughoverall resolution process at NCLT for the big corporates is
still mixed, the market is getting some support as banks are on the way
to recover Rs.77 bln from 6 big NPA cases out of the first tranche of
“dirty dozen” list sent by RBI. The companies are Amtek Auto,
Electrosteel, Monnet Ispat, Bhusan Power, Bhushan Steel and Binani Cement.
Thus Indian market soared on Monday for various factors such as NPA
provision relief, hopes of normal monsoon, big NCLT resolution, and
change in IBC/NCLT rules coupled with Syrian relief rally.
*The US**has added India to its currency manipulation watch list:*
But there was another headwind in the form of US accusations for the
currency manipulation as India is added to the watch list in US currency
manipulation report. The semi-annual US Treasury Department report on
currencies was released late Friday. Although no country was named as a
currency manipulator India was added to the watch list that already
includes China, Germany, Japan, and South Korea.
Although the report is itself “toothless”, however, this report might be
an early sign that the trade dispute from the US (Trump) could open up a
new front on India despite “ the hug politics” from NAMO:
"India increased its purchases of foreign exchange over the first three
quarters of 2017. Despite a sharp drop-off in purchases in the fourth
quarter, net annual purchases of foreign exchange reached $56 billion in
2017, equivalent to 2.2 percent of GDP".
"India has a significant bilateral goods trade surplus with the United
States, totaling $23 billion in 2017, but India's current account is in
deficit at 1.5 percent of GDP and the exchange rate is not deemed to be
undervalued by the IMF," the report said.
"Given that Indian foreign exchange reserves are ample by common
metrics, and that India maintains some controls on both inbound and
outbound flows of private capital, further reserve accumulation does not
It may be worth to note that in 1975, USDINR was around 7.00, equivalent
to USDCNY currently around 6.50; USDINR is currently around 65, almost
10 times devalued against Chinese Yuan and a great source of imported
inflation as the country imports almost 80% of its crude oil requirement.
On Monday, Nifty was helped by HDFC, ITC, HDFC Bank, Kotak Bank, L&T,
TCS, Cipla, Maruti, M&M, Grasim and others by 87 points, while dragged
by Infy (poor report card), Tata Motors (buzz of Job cuts at JLR-UK)
SBI, RIL, Wipro, ICICI Bank, ONGC, Titan, VEDL, Gail and others by
around 33 points cumulatively.
On Monday, overall Indian market was helped by selected private banks
(HDFC twins and Kotak), financials, automobiles, FMCG (hopes for normal
monsoon), media, selected metals, pharma, reality, consumption, infra,
while dragged by public sector banks, selected techs, and energies
*On Monday, global cues were mixed during the Indian market hours:*
US stock future (SPX-500) was up by 0.62% and European stocks were edged
down by 0.13% on higher EUR amid that speculation there will be no
retaliation by Russia to the US, French, and UK airstrikes and missile
attacks against Syrian chemical weapons installations late Friday night.
Crude oil and government debt prices tumbled on reduced safe-haven
demand as no immediate fall-out was expected from the weekend strikes on
Syria from Russia.
The 10Y US bond yield rose to a 3-week high of 2.86% and the German 10Y
bund yield rose to a 3-week high of 0.55%. US ambassador at UN, Haley
said Sunday that US Treasury Secretary Mnuchin will announce new
sanctions on Monday against Russia that "go directly to any sort of
companies that were dealing with equipment" related to Syria's chemical
weapons program. But later Trump dialed back his Russian sanction
Asian stocks closed mixed: Japan +0.26%, Hong Kong -1.60%, China -1.53%,
Taiwan -0.10%, Australia +0.21%, Singapore -0.12%, South Korea +0.10%.
Lower USD was and renewed US-China trade war tensions also dragged the
Asian market sentiment on Monday.
Chinese stocks closed lower, led by losses in bank stocks, after reports
that the PBOC may remove the current ceiling for commercial banks'
deposit interest rates, which could cause the net interest margin (NIM)
at banks to narrow and reduce their profits.
Asian stocks traded with a mixed tone as focus centered on air strikes
on Syria over the weekend and Chinese data. The anticipated US-led
response on Syria finally took place on late US Friday, which was seen
as somewhat of a slap on the wrist as the US decided to hit only 3
targets against the earlier “estimate” of 8 and with the wave of strike
action already declared to be over within 40 odd minutes; it was a very
short and “one-shot” action.
As such, US equity futures gapped higher at the open, while ASX 200 and
Nikkei 225 were also in the green as fears of an escalation subsided.
Conversely, Shanghai and Hang Seng were negative following the miss on
Chinese lending data last week and with Tuesday’s Chinese GDP adding to
the risk factors, while the PBOC also announced to raise the 14-day
reverse repo rate by 5 bps which were in-line with the hikes seen in
money market rates in reaction to the March Fed hike.
But, this PBOC action saw an increase in money market rates in Hong
Kong, while underperformance was led by Rusal which tumbled over 20%
after the US announced to impose further Russian sanctions.
Japan was also under some pressure on increasing political jitters of
Abe & Co. Markets are concerned about the series of scandals plaguing
Abe could lead to his early resignation, putting the future of
Abenomics, and the BOJ's QE in jeopardy. The approval rating for Abe
fell to a record low of 26.7% in a survey published Sunday. He’s been
forced to repeat denials of involvement in scandals as thousands called
for his resignation in a protest.
European stocks opened mixed on Monday, following the mixed tone from
the Asia-Pacific session as investors remain wary of potential
escalating tensions regarding Syria. The anticipated US-led response on
Syria finally took place on Saturday, which was seen as somewhat
“symbolic and muted”. A higher EUR and GBP was also negative for the
European/UK stocks. Energies dragged as oil tumbled, but pharma was
upbeat amid M&A buzz.
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