China-A50: As Expected PBOC Cuts Rate---11600-11300 Could Be Very Good Demand Zone For TGT 14200-15400-16900 ?

Technically, CA-50 (LTP: 11765) has immediate support of 11596-11375 zone & sustain below that, it could fall to 11161* area. Only consecutive closing below 11161,CA50 may further fall to 11090-10767-10567-10450-10100-10000-9860 area in the worst bear case scenario.

On the upside, sustaining above 11596, immediate target might be 12057-12200-12600-12850-13035-13200. Sustaining above 13200, CA-50 may target 13350-13500-13731-14118-14232. Only consecutive closing above 14232, it may target 14350-14535-14900-15100-15400 zone in the near term. In the long term (FY:17-18), only sustaining above 15100-15400 zone, CA-50 may scale up to 16900-18100 under bullish market scenario.

Bottom Line: Technical Trading Levels (Positional)

	SL</>50	FROM SLR
		China-A50	CMP	11765
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	11600-11400		12057*	12200-600	12850	13035-200*	13350-500	13731	14131-200	<11300
Weak <	11300		11161-090*	10767	10450	10100-000*	9860	9475	9275-000	>11600

As expected, after year long huge market rally (nearly 140% Y-O-Y) in China market, it eventually crashed after MSCI decision of not to include mainland China Stocks at this moment (now down almost 25% from recent top) amid excessive broker margin funding, inexperienced retail participation in masses (rural China nearly swept away), creation of bubble in an epic proportion (companies overnight changed name name from real estate to technology stocks without any change in business model etc). slow down in Chinese economy & cooling of real estate (fund flowing from real estate to stock market), earnings growth degradation. IPO rush etc.

Today PBOC cuts interest & RRR rate to stimulate the broader economy of China. Clearly, PBOC is in dovish mode and will act more proactively in future, if situation arises to stem down so called China cooling (slowing economy). But this PBOC action was largely in line with market anticipation, though may not be priced in going by the yesterday's bloodbath in China market.

Looking ahead, MSCI may not prefer to ignore main land China market for so long and might include it in near future in a gradual manner as par China policy framework as it is a huge market and FII(s) are eager to enter more proactively. Though, various market analysts are forecasting now 5% EPS growth against earlier 9-16% (FY:15-16) and downgrading SHCOMP forecast to 3250-4600 (FY:15-16) against LTP of 4192 as on 26-th June, more FII(s) participation & active China Govt support may change the present "gloom-doom-boom" picture. 

After all, we should not forget that China is the world's "growth engine growing at nearly 7%" & "global powerhouse/manufacturing hub", being the 2-nd largest economy in the world (11 trl $ economy) just behind USA (18 trl $ economy) and is increasingly looking to far east for more growth out side China, EU, USA & other G-6 countries & one of the four major pillars of world economy (along with EU/USA/JAPAN), supporting the global recovery.

Along with China, it will be an interesting global market on Monday amid Greece drama and recent history shows that China market crash is helpful for India market rally (as par reverse fund flow theory), we might see the vice-verse this time.