Nifty Fut(Apr): 8005-8055 May Be A Big Hurdle, Even If Sustain Above 7930-7980

Trading Idea: Nifty Fut (Apr)

SGX NF: 7900 (CMP)

NSE NF: 7860 (LTP)

Either Sell below 7930-7980 or on rise around 8005-8055;

TGT: 7810-7715-7630-7530*-7470-7410*-7310-7205*-7140-7000 (5-15 days)

TSL> 8075-8125

(SL=+/- 25 points from TSL)

Note: Consecutive closing(3 days) above 8075-8125 zone for any reason, NF may further rally up to 8240*-8335-8450*-8575-8665*-8745 in the near term (alternative bullish case scenario).

NF rallied quite remarkably last week from the vital support level of 7540 on the back of above normal monsoon forecast this year, above expected CPI & IIP data and positive global cues supported by China data and hopes of some production freeze agreement for oil in Doha. 

After two years of below normal & irregular monsoon, India may receive this year the much awaited normal monsoon. But, more than absolute quantity of normal average monsoon (around 89 mm), distribution and timing is most important. As par the weather experts, we may see less effect of El-Nino this year, but some effect of La-Nina will be there, which can cause excessive rains & floods in parts of our country also.

Moreover, India has to tackle the present drought & water crisis in large parts of the country as major parts of India (central/west/south & parts of NE) are reeling under unusual heat waves. Though CPI dips to around 4.8% unexpectedly last month, food inflation (pulses/vegetables etc) may skyrocketing this month and we may see CPI again around 5.5% in the months ahead. Monsoon will come around June and by August, picture will be clear for the RBI for another possible rate cut by 0.25%.

Though Q4FY16 results of Infy is above expected, its not great in USD terms (INR FY15 EPS was at 52.95 & FY16 EPS at 59.02; i.e. around 11.5% YOY earning growth largely supported by weak INR).

Going by the time & price action, NF may be in an extremely overbought zone and as par daily EW cycle, the current impulsive 5-th wave may end around 7950 (i.e. around 300% impulse of  EW-1) and in that scenario, corrective EW-A may take it to around 7390-7250 zone in the near term.

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