SGX NF: 7834 (CMP)
NSE NF: 7838 (LTP)
As par early morning indication, NSE NF may open around 7840-50 after overnight stable US holiday market.
US market has undergone around 4% correction in S&P500 after Fed day and is now trading around 2016. Looking ahead, it has strong positional support of 1990-80 and sustain below that 1960-50 & 1860-50 might be the lower target. On the upside, S&P need to sustain above 2025-32 area for target of 2050-61 & 2080-2105 in the near term.
NF, on the other hand is showing remarkable resilience even after Fed induced global equity market slowdown (except China, for its own stimulus effort) and no GST in this winter session of Parliament amid political war. But this unusual resilience amid negative or not so positive news flow came in extremely tepid volume amid holiday thinned trade (as most of the institutions desks are now enjoying Christmas holidays) !!
Technically, NF need to sustain over 7865-7900 zone now for further "Santa" rally up to 8015-8110 area. On the downside, sustain below 7834-7800, NF will target 7760*-7725-7691 and consecutive closing below it, 7625-7540 zone may be the target in the near term.
Similarly, BNF (LTP: 16798) need to sustain over 16910-990 area for a "Santa" target of 17177-380 & 17550 in the near term. On the downside, sustain below 16800-750, BNF may target 16692-625 & 16494-16200. Consecutive closing below 16200 zone for any reason, BNF may further fall towards 15780-700 area in the near term.
BNF got support from the not so much "hard" base rate calculation method of RBI (based on marginal cost of funds) as anticipated by the market and passage of "Bankruptcy" bill in the LS. Though, after implementation of this bill, Banks may show more NPL in their books.
Despite there is now virtually no possibility of GST passage in the current Winter session of Parliament, which will end tomorrow amid ongoing political war and game of blame & counter blame, our market is showing remarkable resilience, although with very low participation. This is perhaps on the back of some reports that, Govt will be able to pass GST in the forthcoming Budget session (March'16) in the RS, when BJP will gain some 3-4 seats and Cong will loose some 7-8 seats as respective terms will end. In that scenario, Govt (NDA) will take help of all other political parties except Cong for passage of the same.
But as par various permutations & combinations, NDA, which has now around 64 seats in the 245 seats strong RS, will be able to get maximum 75-80 seats in 2016 and in that case, it has to take support of all the other major political parties in RS for passage of the GST & Land bills. Considering the coming election in WB/Assam/UP, these may be a daunting task and without Cong's help (direct/indirect), it may not be possible at all even in 2017-18 !!. Its only after 2019, BJP/NDA may garner the required 2/3-rd majority in RS (165 seats). But, by that time, the term of the present Govt will end and if all goes well with NAMO wave, its only after 2019, we may see BJP having absolute majority in both houses of our Parliament and only then, we may see Nifty towards 9700-10250 area and new Bull market amid real recovery and implementations of various reforms.
There is another theory in this ongoing GST politics. Cong want this GST to be effective from 2017-18, because in that case, inflationary effect (if any because of increase in service tax etc) will be visible in the economy by 2019 election time (generally it takes 1-2 years for transmission of GST effect in an economy). On the other hand, BJP will hesitate, if implementation of GST goes beyond Oct'16-Apr'17. Corporate world is not so much concerned in reality, as this is a "flawed" GST and roll out of the same may also require massive IT infra cost upgradation amid their stretched balance sheet.
Clearly BJP will need to believe in its own economic & reform agenda more boldly and the Govt could easily pass these vital bills by calling Joint Session Of Parliament, rather than repeated begging to Cong. The political scenario is also getting murkier day-by-day, with Patiala House Court fast becoming the next "Parliament" of Indian democracy !! In that sense, BJP need to manage the oppositions & Cong more effectively as it will be not able to gain RS majority even by 2019.
Analytical Charts:
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