Bank Nifty Fut (Aug): Some Strength Only Abv 19150 for 19300-500, Otherwiese, Expect 18200 Again--Hawkish RBI & Parliament Logjam May Drag

Technical Charts:

Technical Analysis:

BNF (LTP: 18936) has to sustain over 19150 at least, for an immediate target of 19300-19500*. Only consecutive closing above 19500, BNF may target 19700-20120-20720 area in the near term (Bullish Case Scenario).

On the flip side, inability to sustain above 19150, might result selling and we may see BNF drifting towards 18808-18648* zone. Sustain below 18648, BNF may further fall to 18507-18191-18000 territory by next few trading sessions (Bear Case Scenario).

Technical Trading Levels(Positional):

BNF-Aug	LTP	18936
SL=+/-	25 POINTS	FROM SLR
			T1	T2	T3	T4	T5	SLR
Strong >	19150		19300*	19500*	19700	19900	20120	<19100
Weak <	19100	19027	18866-08	18648*	18507	18340	18191	>19150

Some News Inputs:

BNF, specially PSU banks surged to 10 day high amid Govt's recapitalization plan and upgrade of PSU Banks stocks by CLSA. Over the years, PSBS account of stressed assets has grown sequentially and now stands around Rs.4 lk cr because of visible slowdown in major sectors like steel/metals, cement, power, infrastructure and also agriculture. But, there is a "slight glimmer of hope" in the latest quarterly earnings of major 5 PSBS so far as par CLSA and formation of new NPA is gradually moderating. In other words, worst may be over as far formation of new stressed assets for PSBS is concerned. But again, market will keenly watch forthcoming Q1 result of SBI, which may be a real proxy for corporate/SME India's debt profile, being the largest lender of our country.

Although there is some positive news on Land Bill as NDA is now ready to pass the UPA version of it by rolling back its own critical amendments, market may spooked by growing parliamentary logjams amid yesterday's suspension of 25 INC MP(s). Also, the land bill is being diluted, investors may find it hard to comply and there is also fear of GST bill's fate hanging in doldrums, market might drag after RBI event today. Clearly, NDA (Govt) gas to believe in its own reform agenda.

RBI meet is most likely to be a non-event today, but market will keenly watch RBI's tone. Any unwanted hawkish tone by RBI (because of poor July monsoon & consequent jump in some food articles/inflation probability and Fed lift off phobia) might translate huge selling in BNF. On the other side, any cut in CRR/SLR/MSF to boost liquidity in banks (specially PSBS) may ignite the market. RBI will cut most probably in Oct'15 for a "Dewali Gift" for us. Also, any step towards diminishing veto power of RBI Gov by the Govt may be viewed as negative by the FII(s) as too weak INR will hurt bond yields severely and we may see massive selling both in our bond & stock markets. But the fact is that India is now the only large economy in the world to have such high rate of bank interest years after years and that is aiding the overall economic slowdown here. Govt must think to formulate some different policy to tackle inflation, specially food & wage. As par text book, RBI Gov is right as the World's fastest growing economy (at least theoretically ??) does not need rate cut any more, but again text book economy and real economy is quite different.

And last of all, don't forget Greece---its still there and a long way to go.

Techno Funda Valuation Of Nifty By BG Metrics (Modified):

Current median valuation: 7850 (Ideal Buying Zone)

Projected fair valuation: 8700-9400-10350 (FY:16-18)

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
CNXNIFTY	365	2440	20	7766.50	7867.60	7817.05	8262.82	8479.34

 

CNXNIFTY

450

2700

20

8623.54

8735.79

8679.66

8262.82

8479.34

 

CNXNIFTY

525

3000

20

9314.48

9435.73

9375.11

8262.82

8479.34

CNXNIFTY

635

3350

20

10243.92

10377.26

10310.59

8262.82

8479.34