Nifty Fut (Nov) : Eyeing For Diwali Rally ?

Expect 8250-8340 only sustaining above 8050-7975; 
Otherwise 7840-7680 on the card

Bihar election & Q2FY16 results will be the key in the near term

Trading Levels: Nifty Fut (Nov)

SGX NF: 8066 (LTP)

NSE NF: 8084 (LTP)

	SL (+/-) 10 POINTS	FROM SLR
For	Intraday Swing	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	8050		8110-140*	8185-215	8250-270*	8305-340	8365-405	<8030
Weak <	8030		7998-975*	7931-870	7815-750*	7705-680*	7632-540	>8050
FOR	Conservative	Positional	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	8050		8140*	8215	8270	8340	8405-435	<8030
Weak <	8030		7975*	7870	7750*	7680*	7540-500	>8050

As par EW set up in daily chart, NF is in the 4-th wave (corrective) and the projected target may be around 8050 or 7840 zone. If 8050 area in NF holds, then the 5-th wave rally may take us to around 8250-8340 area again.

Exit poll result will be released on 5-th Nov evening after the last date of polling and counting will be held on 8-th Nov. As par various reports, the actual result might be very close and NDA/BJP may not be a position to get absolute majority. Thus BJP not getting majority in Bihar is already discounted by the market to a great extent. Hence, any positive surprise for BJP in Bihar may spike the market. Alternatively, very bad result (below expected) for BJP may also spook our market to a limited extent.

Although, the Bihar election result will not materially affect the RS majority factor for BJP/Govt, it may act as a sentiment for our market. As par various permutations & combinations, BJP will not be able to garner RS majority until 2019 and by that time its present term in LS will end. So, its only after next parliament election in 2019, we may see BJP/NDA have both LS & RS majority and real implementations of various key reforms in India.

Till then (2019), BJP has to continue its political management and back door negotiations for passage & implementations of key reform bills such as GST, Land Reform etc (in right form of course !). 

As Moody recently rightly pointed out the harsh reality of  RS majority factor for BJP and advised NAMO to control its workers/political leaders for unnecessary comments/controversy etc, otherwise risk loosing credibility both in international & domestic front. 

In any way, even defeat of BJP in Bihar may be good for our economy/market (after a whipsaw of course !) in the sense that Govt will try to implement its various key reform bills more vigorously which do not require any parliament legislation. 

Certainly, BJP will need to believe in its own economic reform agenda and after Bihar, they might realize that they have nothing to loose, at least politically by implementation of economic reforms more boldly because at the end of the day, common peoples of the country will need to see their real income levels are rising. They are not bothered about "Beef Politics" or anything else.

Friday's release of key TMC leader from Jail after a long time in the Sarada Scam (WB), might be an indication of back door negotiation on the part of Govt with its political opponents for passage of key reform bills in the forthcoming winter Parliament session.

After Bihar election, also Cong's disruptive political tone should be down and it may also consider giving some indirect support for passage of GST and modified land bills with some of their "suggestions", because ultimately, they will also realize that destructive image will not help them either in getting votes !!

Land bill being a politically sensitive issue, Govt may also let it push for individual states for its own implementation and competition among states for attracting investments will take care of the rest automatically.

If  key opposition parties will not co-operate in passage of GST, then we may see a joint session of parliament for passage of it in the days ahead, because after Bihar election, BJP/Govt may feel that there is little political risk in it.

Regarding Q2 earning season, although there was little expectation, on an average it is so far fairly in line with estimates (except some knee jerk results & guidance from some leaders) and there is indication of slight margin expansion too. In Q3 & Q4, we may see visible improvement in earnings because of transmissions of rate cut, subdued commodity prices and better operating leverages. 

There is no dearth of global liquidity despite fear of Fed hikes (although Dec'15 probability is still below 50%, even after hawkish Fed statement last week). In reality Fed will continue its verbal interference without any real action till at least March'16 and may take excuses such as China slow down, strong USD (dovish ECB/BOJ), US lowflation & slow export growth, low/nil wage inflation etc from time to time. 

But Fed will pretend that every meeting will be a "live" one; i.e. Fed drama will continue as it is, because other major currencies are getting devalued against it continuously and if really Fed choose to act in, then USD will be more strong and hurt the US business growth even more.

Due to relatively political stable factor and appeal of 4D of NAMO (democracy, demography, demand & deregulation), India may be in the "sweet spot" in the days ahead. Also financial market & INR is relatively stable here with lots of good quality companies/startups having great business ideas & management credibility.

Thus investors will continue to buy on every major dips in India even for "recovery hopes" simply because there is not so much alternative EM available at this moment and forth coming Bihar election & current Q2FY16 result oriented volatility might be such an opportunity to enter in good quality stocks at bargain price.

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