Nifty Fut(Oct): Need To Sustain Over 7950-8075 For 8200-8325

Double "Dhamaka" Of  Rate Cut by RBI & MAT Relief By Govt/SC  May Help ?

SGX NF: 7880 (LTP)

NSE NF: 7896 (LTP)

Trading Levels: NSE NF (Oct)

	SL (+/-) 10 POINTS	FROM SLR
	Intraday Swing	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7860		7910-50*	8000-75	8095-125	8160-210	8255-80	<7840
Weak <	7840		7814-795*	7760-698	7675-25	7590-40	7500-450	>7860
FOR	Conservative	Positional	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7860		7950*	8075	8125	8210	8325	<7840
Weak <	7840		7795*	7698	7625	7540	7450	>7860

Exhausted & tired of Fed drama, all our eyes will be on RBI on 29-th Sep. Its almost certain that RBI will cut rate at least by 0.25% . 

There may be four scenarios:

Hawkish Cut : If cut is 0.25% with hawkish tone of RBI; Nifty will be sold after rally up to 8125-8200 and we may fall again to 7900 zone. As in that case RBI may not cut further on Nov and will wait for Dec Fed move and watch domestic inflation etc).

Dovish Cut: Nifty will stay and consolidate around 8200 and may further rally up to 8325.

Dovish Cut with CRR/SLR/MSF tweaking and PSBS consolidation plan: Nifty may rally up to 8500-8675 zone in the near term.The same result will be there if RBI cut by 0.50% with no CRR/SLR tweaking also.


Hawkish/Dovish Hold: If there is no cut on Tuesday, Nifty will be sold off and it may fall up to 7549-7450 in the near term. 

Considering the various aspects of our macros and inflation trend, real rate of interest,  global/Fed scenarios (ultra low rate and easy monetary policy) etc, there should be no reason for a 0.25% rate cut, if not by 0.50%. 

RBI gov may raise issues of proper transmissions of previous rate cuts by banks and base effect of CPI/WPI and Fed hike probability in Dec'15 and stay hawkish/cautious.

Our market will take the 0.25% rate cut with such hawkish tone as negative in the sense of "too little and too late" and may sold off  after rallying up to 8125-8200 zone (buy on rumour and sell on news).

As par reports, SC may also take the matter of Castleton MAT issue on 29-th Sep itself . On last Thursday, Govt issued a press note officially and stated that FPI(s) will not have to pay any MAT prior to April'15, who has no "Permanent Establishment" in India. Those FII(s) originating from countries having DTAA agreement with India will also have not to  pay any MAT. 

This will make virtually all types of foreign investments through FPI(s) or FDI etc under clear tax rule and none them is now required to pay any MAT. Most probably, SC will take a similar view in Castleton case. 

FII(s) are not adverse to pay any tax, but all that they want a clear, consistent & predictable tax policy along with ease of dong business in India. Only then, they will be confident and bring further investments in India.

All eyes will be on the winter session of parliament to amend the necessary IT Act for this MAT issue and also on the Govt for resolving other such high profile legacy tax issues (Vodafone, Cairn etc) at the earliest. 

Also recent SC appeal by the Govt/IT Dept against AP HC order on Sanofi case need to be resolved early as India is not in a position now to tail the FII(s). 

But some clarity may be needed for Non-DTAA countries for this MAT issue. Hopefully, our Govt will provide that without any further delay.

While most of us are probably enjoying long weekend, our PM is working very hard over the weekend trying to "sell" India growth story in US with 4-Ds (Deregularisation, Democracy, Demography and Demand). 

Despite, China's prez and Pope's presence in US at the same time, NAMO is able to attract significant media coverage there (although mostly backed by Indian media), its a huge success. 

But follow ups action should also be there on the part of our Govt by taking various pro-active steps for reforms more boldly and mere "marketing" will not bring enough foreign investments.

Globally, there is no dearth of liquidity as all the major economy are maintaining "easy money" policy. At the end of the day, its up to India how to bring investments here.

Globally, Spain's regional election (Catalonia) may cause some mini turbulence for EURO as they are apparently voting for "independence" from  EURO area. UK may follow soon also.

Also all eyes will be on Fed's Dudley today to have an assessment how serious is Fed about Oct/Dec rate hike after Yellen's hawkish statement on last Thursday (after that she nearly fainted too !!)

Due to QTR end factor, we may also see some portfolio re-balancing to pop up NAV by fund managers and that may also cause some volatility.   

In the near term, there are three main factors for causing EM crisis:

1. China jitters (over capacity in manufacturing and construction sector) as it perhaps grows too fast.
2. Subdued global commodity prices with China slow down: Russia and Brazil most affected, being the largest commodity producers. But India may be a net beneficiary of that and that should be visible in the next few months.
3. Uncertainty about Fed rate hike.

Now, Brazil seems to be in serious crisis with its political and economic challenges. China's financial market is not so matured enough and it will take some time to stabilize. Also, China has various financial tools in its kitty to combat the so called "slow down".

India has great opportunity to attract huge FDI in different sectors, if it is able to act fast and in a more proactive serious way. Only "Sell India" theme will not work !! 

Govt has to belief in its own reform agenda more boldly and has to do it in any way, whatever be the political cost. Joint session of parliament to pass the important bills every three months will not be a bad idea !!

By 2019, BJP should get both the parliament & RS majority of its own as there is no comparable political leader like NAMO visible in the Opp. Cong till now (RJ is not matured enough). In that sense, forthcoming Bihar election may not be a game changer, but it may be a proxy for NAMO & its policies so far.

Only then we could see a real rally in the market instead of "hope rally".    

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