Bank Nifty Fut (Dec): What's Next Ahead Of Fed & GST Drama ?

BNF Need To Sustain Above 16500-660 For 17000-300

Otherwise Below 16250-140 Expect 15780-700

Over Concern (?) over stressed assets dragging the BNF--

Trading Levels: BNF (Dec)

LTP: 16385

SL=+/-	25 POINTS	FROM SLR
			T1	T2	T3	T4	T5	SLR
Strong >	16500		16625-660*	16717-800	16935-997*	17066-108	17177-270	<16450
Weak <	16450		16250-140*	15985-917	15780-700*	15560-485	15325-175	>16500

For the last few weeks BNF corrects by around 10% against the broader market (Nifty) correction of around 5%. The primary reason for this under performance may be renewed concern by RBI over stressed asset quality of some of the banks, SDR & other debt restructuring mechanism being employed by the banks, issues of base rate cut transmissions and new methodology of base rate calculation to be effective by FY-17. 

RBI is also concerned about overall NPL/NPA situation of banks, specially in PSBS and growing tendency of some of the banks to hide the actual stressed assets in the system by financial reporting juglary/tricks.

Market may be also concerned over highly leveraged corporate loan accounts in some of the banks and impending Fed rate hike effect on USD dominated debts of the corporate India.

Also recent data on inflation, which is indicating an upward trend in both core & food inflation, may hinder prospect of aggressive rate cut by RBI in 2016 (FY-17). There is also some concern over wage inflation effect due to 7-th Pay Comm and USD outflow fear after Fed hike and its FFR guidance. 

As a result, many blue chip banks are now hovering near or below their 52-wks low. 

Among all these concerns, there is a light of hope as Moody's think that " Indian banks will get more resilient despite bad debts" due to good banking regulation, liquidity back up by the Govt (for PSBS) and highly expected overall economic recovery along with infra boom and kick start of stalled projects in India.

Technically, BNF may be in the corrective C wave in monthly EW cycle and the projected target of the same is near 16250. Further, recent price action suggests that sustain below 16250-140 for any reason, BNF may dips to 15780-700. Consecutive closing below 15700, BNF may further fall towards 15000 zone in the near term.

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