Bank Nifty (Sep): Are We Heading For 18200 or 15500 Amid Fed's Attempt For The Greatest Monetary Experiment In History ?

Trading Levels (Positional):

BNF-Sep	LTP	16957
SL=+/-	25 POINTS	FROM SLR
			T1	T2	T3	T4	T5	SLR
Strong >	17050		17130-260*	17365-475	17540-660*	17791-955	18080-200	<17000
Weak <	17000		16924-730*	16627-528	16300-210*	15980-917	15793-720	>17050

Some Key Takeaways:

The global market including Wall Street & Dalal Street are trading quite strong ahead of Fed without any fear and the risk trade is "on". It appears that the market has largely discounted the the following first two Fed scenarios:

• Fed holds with a hawkish commentary (Hawkish Hold): Fed holds and kept alive about Oct/Dec'15 lift off idea. There is 70-80% probability for this.
• Fed holds with a dovish commentary (Dovish Hold): Fed holds and does not stress about any immediate hike, even in Dec'15. There is 20% probability for this. 
• Fed hikes by 0.25% with a dovish commentary (Dovish Hike): Fed lifts off by at least 0.25% or even by 0.50% and make it clear that there is no probability of imminent hike in 2016 and they will closely monitor the economic progress and may also take corrective steps.There is 10% probability for this.
• Fed hikes by 0.25% with a hawkish commentary (Hawkish Hike): Fed lifts off by 0.25-0.50% with a hint that from 2016 on wards, there will be possibility of hike @0.25% in every Fed meeting until the Fed Fund Rate reaches 3.50-3.75% as par economic progress!! There is less than 10% probability (or zero chance) for this.

Overall, market may not react more than 3-5% on either side in any of the above first three probable  Fed scenarios.

Back to our market:

• Hawkish Hold by Fed: RBI may cut only 0.25% in Sep and will wait for   Fed in Dec'15.
• Dovish Hold by Fed: RBI may cut by 0.50% in Sep!!
• Dovish Hike by Fed: RBI may put on hold and will wait for Dec for further evaluation.In that case RBI may again raise the issue of late transmission of previous rate cuts by banks.If Fed hikes by even 0.25%, then there may be chain reactions among other central bankers and UK might be the 2-nd developed economy which can raise rate also. Others may soon follow for the interest rate differential and to prevent capital outflow.
• Hawkish Hike by Fed:RBI may be forced to raise rate to prevent capital outflow simply for interest rate differential.

Bottom line:

As global market is already corrected recently quite a lot including India, even for a dovish hike by Fed we may not fall down more than 5% in the worst case scenario. On the contrary, dovish hike may be largely discounted by the market already and after some whipsaw reaction, market may stabilize or even rally, because by a confirmed Fed decision, a great deal of year long uncertainty will be removed and market will then concentrate on other factors.  

In case of Dovish or even Hawkish hold be Fed tonight, there is a strong buzz that RBI may cut as early as tomorrow (by at least 0.25%) in an out of policy manner to give an appropriate rate cut "Gift" on the occasion of "Happy Ganesh Chaturthi" to the nation!!

Technical Charts: