Nifty Fut: Expect 8200-8400 By FY16 & 9200-9400 By FY17

For NF (Nov), 7750-7680 is big support now followed by 7540-7500 zone; 

Near term target 8055

After Bihar "debacle", Govt's pro-active reform initiatives 
& dovish RBI may help,

Despite Fed lift off "risk" in Dec'15

SGX NF: 7790 (CMP)

NSE NF: 7800 (LTP)

Trading Levels: NF-Nov

	SL (+/-) 10 POINTS	FROM SLR
For	Intraday Swing	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7770		7825-40*	7900-80	8005-55*	8085-110	8135-205	<7750
Weak <	7750		7720-680*	7660-30	7563-40*	7500-445	7400-300	>7770
FOR	Conservative	Positional	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7770		7840*	7980	8055*	8110	8205-340	<7750
Weak <	7750		7680*	7630	7540*	7445	7300-7030	>7770

As expected, after Bihar election debacle (primarily for its own strategical blunder for BJP), Govt is now gearing up for all possible non-legislative reforms in a big way and yesterday's "Diwali gift" of big-bang FDI reforms may be just an indication. 

We may see more such pro-active initiatives on the part of the Govt in the days ahead irrespective of any political compulsions, because after Bihar election, BJP might realize that "intolerance, beef politics, mud slugging " etc are not alternatives for pro-development agenda to win voter's mind. 

Regarding various key reform passage, which are stuck in RS, Govt may also try to push it through state levels in an indirect way (like land reforms). After Bihar, Govt may also try to reach out to the key opposition parties in RS with more soft tones and re-conciliatory manners (i.e. back door negotiation & effective political management) leaving aside its "arrogance of LS numbers" for passage of GST & other key reform bills in winter session of Parliament. 

If united oppositions will not "oblige" either directly or indirectly (through abstain), then we may see even an extreme step like "Joint Session Of Parliament" to pass those bills.

Clearly, BJP should believe in its own economic agenda and reform implementation policies more boldly, otherwise, even 2019 Parliament election may not be a "smooth affair" for it.   

Also state level acceptable face of a leader is required for a CM's post; too much dependency on "brand NAMO" & disassociation of its former key professional strategist also costing the BJP to a great extent. The strategist, who actually made the "brand NAMO" along with his professional team,  recently shifted to Nitish Kumar's camp just few months ago of Bihar election, after some section of top BJP leaders tried to dump him after 2014 parliament election success (before Delhi election) !!

Though Q2FY16 result is more or less as par street estimates, certainly some margin expansion is happening. Going ahead, with full transmission of 125 bps rate cut and RBI's possible dovish stance in FY16-17, we may see better corporate earnings, operating leverages and overall economic recovery despite there may not be favorable base effect of commodities. RBI may cut another 0.50% by March'16 for the favorable inflation curve and token Fed hike (0.25-0.50%).

After last Friday's block buster NFP data and hawkish statements of various key FOMC members, including Yellen, its seems that Fed is likely to go for some "real action" in Dec meet. FFR is now showing around 66% probability of Fed lift off in Dec'15. The market is now giving attention, how fast Fed will act and projecting an average 0.25% in every alternate meet, thus targeting Fed Fund Rate 1.25-1.50% by Dec-2016 from the 0-0.25% at present.

But having said that, there will be various economic data including retail sales & NFP on Dec-1st week and Fed will likely to see that also very closely for any real lift off. Going by the pure text books of economy, Fed should have hike rates much before, but the real US & global economy is not a text book and there will be political pressure on Fed too for not taking any ultra hawkish steps, specially in the 2016 election year of US.

Thus going by recent rally in USD, even if Fed decides for a token "one & off"  hike with dovish tone in Dec'15 to counter growing criticism and lack of confidence on US & Global (say China) economy, USD will be sold.  Any ultra hawkish statement from Fed, like successive rapid increment @0.25% in every alternate meet will likely to cause USD more strength and will be not good for US economy itself. Thus, Fed may say that although headline job numbers is looking great, absolute participation rate is falling and refrain from any ultra hawkish stance for a "meeting by meeting live event" !!

Even if, Fed decides to hike, there will be no dearth of liquidity globally as "24/7 printing machine" & QQE will "on" in the foreseeable future, thanks to ECB, BOJ & PBOC. 

For India, appeal of 4-D and lack of other stable EM destinations will be an added advantage to attract global liquidity; now it is up to India to set its policies and reform agenda in the the right direction to attract more FDI in a sustained way.

Thus investors may take volatility in our market as an opportunity to enter good quality of stocks having credible management, earning visibility and great business model with good debt profile.

Technically, NF has good support at around 7770 (also extended EW-4 target) and sustain above that, next EW-5 may take us to around 8055 area in the near term.

For FY16, target may be around 8200-8405 and consecutive closing above 8435, Nifty may scale up to 9200-9400 by FY17.

Have a great "Diwali"-----

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