Trading Idea: Nifty Fut (June)
SGX-NF: 8100 (CMP)
NSE-NF: 8070 (LTP)
Either sell around 8125-8165 OR on rise around 8210-8250;
TGT: 7999*-7905-7845-7775-7690*-7655-7585-7525*-7480-7440 (5-15 days)
TSL> 8185 OR > 8295
Note: Consecutive closing (3 days) above 8185-8295 zone for any reason, NF may further rally up to 8350-8405*-8520-8685 in the near term (alternative bullish case scenario from the present trading level).
NF made a smart rally from the vital positional support zone of 7700 almost in a T-20 style on the back of some global market "risk on", "upgrade" of Indian market from previous "downgrade" by some institutions (a gift to the nation amid NAMO-2-nd year anniversary ??), better monsoon prediction by Skymet (although delayed and probability of 87% of normal rain in June) and better than expected earnings by some of the blue chips.
Now going forward, immediate drivers of the market will be Fed & RBI stance and passage of GST in the forthcoming monsoon session along with recapitalization of the PSBS amid record NPA provisions.
Going by the current inflation trajectory, intensive drought situation in major parts of India and its effect on food inflation, RBI may not oblige for a 0.25% rate cut on 6-th June and may wait for actual Fed stance on 16-th June, Brexit vote outcome, actual progress & distribution of monsoon and may wait for August for any possible rate cut. It will be also very unusual for RBI to cut rates in two successive meets and instead it may focus more on the present liquidity situation and full transmission of the previous 1.50% rate cuts (as only 0.60-0.75% was transmitted by the banks so far).
Although INC suffered a major set back in the recent state elections, BJP is also neither a major beneficiary of that except some consolation in Assam. BJP+ has got total seats of around 90 this time which was around 285 in the last 2014 Parliament election. Clearly, various regional political parties will influence more in the days ahead and that is also negative for the overall reform & its implementation process in our country.
As of now, it will be very difficult for the Govt to pass GST in the RS without Cong's support and even if there is vote on this, it will be also difficult to gather all the other "opposition" votes to defeat Cong in the RS. Even if, GST will pass in by FY-17, its actual implementation may happen only after 2019 election as it seems that BJP/RSS too are not sure about its inflationary effect on the economy/common people because of increase in service & some other taxes. If Govt is very serious about GST, it may pass that in the last year itself by calling joint session of parliament without seeking for Cong's help. In any way, a faulty & doubtful GST is not good for our economy too !!.
Regarding present ongoing Fed drama, all eyes will be on Yellen speech today & on 6-th June and Fed has a hard time to convince market that every meeting is "live" including June/July. Nobody is believing in Fed now and its credibility seems to be at stake.
China credit bubble may be another serious risk for the global market in the days ahead.
China credit bubble may be another serious risk for the global market in the days ahead.
Analytical Charts:
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