Nifty Gained By Around 0.80% Amid Doubt of "Real Brexit", BOJ Jaw Boning & 7PC Booster

Nifty Fut (June) closed around 8204 after making a low of 8155 & high of 8215.

Technically, for the expiry date tomorrow, NF need to sustain above 8225 zone for an immediate target of 8275-8340 area.

On the flip side, inability to sustain above 8225, NF may face some selling pressure and may fall up to 8155-8105 & 8075-8000 zone for tomorrow.

 

Today Asian morning session started with the same old "jaw boning" from the BOJ official and as par various reports, they had already intervened two days ago in a small way, when USDJPY was around 100 level. Subsequently USDJPY surged towards 103 zone and with that, we are witnessing some "risk on" trade in the global as well as Indian market.

As par various reports, probability of "Real Brexit" is now very low as of now and in the foreseeable future at least until end of 2017 because of ongoing political turmoil in UK. Article-50 will be only invoked by the new Govt/PM after Oct'16 (if at all) and then a fresh general election may be called with the main theme of this "Brexit" and only after invocation of the Article-50, formal negotiations with EU will start for any "real Brexit" or for getting "better terms".

In any way, although this type of public referendum of "Brexit" may put pressure on the UK Govt to act, but its not legally binding. So, all these will delay the actual process of UK exit from the EU by at least 2-3 years and till then there will be considerable uncertainties both on the "Wall & Real Street".

Looking ahead, UK Conservative Party's leader election/selection and their tone for the "Real Brexit" & BOE statement may be the driver tomorrow. 

There is also some market talk that FED may unleash QE4 as an excuse of "Real Brexit" and threat of another "US Recession". 

DB may pose significant risk as another "Lehman" types of collapse in 2008.

Today as par expectations, Govt approved 7-PC recommendations, which entitles 20-25% salary hikes for nearly 1 cr central Govt & pensioners and payment of arrears in tranches. The overall structure of 7-PC & staggered nature may be more beneficial for small & mid ticket size of consumption than high ticket (like real estates etc). Subsequently, stocks of autos (specially Hero Motors/TVS in 2-W), consumer durable (such as Voltas) jumped today amid hopes of higher disposable income and more discretionary spending after salary hikes. 

Residential real estate may get a boost only if there will be larger arrears one time pay out.

But, this 7PC induced liquidity may also pose a risk of higher inflation in our economy, if consumers really indulge in the expected buying spree. 

Also, with the central Govt implementation of 7-PC, other states will have to increase their salary structure for the state Govt employees also without any increase in productivity. This may put immense pressure on the overall combined fiscal deficit of our economy, but it may be a $50 bln stimulus package for our economy also. Travel & tourism may also get some boost for this 7-PC.  

Any way. in the short term, we may see big boost in the small ticket consumption (if those central Govt employees really spend as expected after getting more money in hand) and apart from the above sector, financials may also benefit significantly, because lack of adequate consumer confidence and concern for future generation, may force majority of the surplus money towards savings & investment related financial instruments (mostly insurance & fixed income products along with some moderate risk instruments, like MF etc).

As par some calculation, 7-PC induced liquidity may boost consumption by around Rs.50000 cr, savings by around Rs.30000 cr and GDP by 0.5% over the period of 2-3 years. Govt may also earn incrementally higher by ways increase collection from indirect & direct taxes.

Today Govt also passed the Model Shops & Establishments Act, which may pave the way for 24/7 malls, restaurants, multiplexes etc and combination of this with 7-PC hope, retail stocks also jumped (Shoppers Stop, Future Ent etc).

Metal & mining stocks also rallied decently after Govt cleared National Mineral Exploration policy (also a know factor, but need to go through the fine print also).

Notably, DLF jumped big after reports that the promoter family will infuse around Rs.10000 cr by way of preferential allotment from the expected stake sale proceeds of its rental arms (known factor) and also residential projects. But there is also some doubt about the actual amount of stake sale and nature of disbursements (at one tranche or in a staggered manner). As of now, DLF is expected to raise around Rs,15000-16000 cr by selling stakes and its overall debt is around Rs.22000 cr.

Article Courtesy: Frontiza.com

Nifty Gained By Around 0.80% Amid Doubt of "Real Brexit", BOJ Jaw Boning & 7PC Booster

Nifty Fut (June) closed around 8204 after making a low of 8155 & high of 8215.

Technically, for the expiry date tomorrow, NF need to sustain above 8225 zone for an immediate target of 8275-8340 area.

On the flip side, inability to sustain above 8225, NF may face some selling pressure and may fall up to 8155-8105 & 8075-8000 zone for tomorrow.

 

Today Asian morning session started with the same old "jaw boning" from the BOJ official and as par various reports, they had already intervened two days ago in a small way, when USDJPY was around 100 level. Subsequently USDJPY surged towards 103 zone and with that, we are witnessing some "risk on" trade in the global as well as Indian market.

As par various reports, probability of "Real Brexit" is now very low as of now and in the foreseeable future at least until end of 2017 because of ongoing political turmoil in UK. Article-50 will be only invoked by the new Govt/PM after Oct'16 (if at all) and then a fresh general election may be called with the main theme of this "Brexit" and only after invocation of the Article-50, formal negotiations with EU will start for any "real Brexit" or for getting "better terms".

In any way, although this type of public referendum of "Brexit" may put pressure on the UK Govt to act, but its not legally binding. So, all these will delay the actual process of UK exit from the EU by at least 2-3 years and till then there will be considerable uncertainties both on the "Wall & Real Street".

Looking ahead, UK Conservative Party's leader election/selection and their tone for the "Real Brexit" & BOE statement may be the driver tomorrow. 

There is also some market talk that FED may unleash QE4 as an excuse of "Real Brexit" and threat of another "US Recession".

Today as par expectations, Govt approved 7-PC recommendations, which entitles 20-25% salary hikes for nearly 1 cr central Govt & pensioners and payment of arrears in tranches. The overall structure of 7-PC & staggered nature may be more beneficial for small & mid ticket size of consumption than high ticket (like real estates etc). Subsequently, stocks of autos (specially Hero Motors/TVS in 2-W), consumer durable (such as Voltas) jumped today amid hopes of higher disposable income and more discretionary spending after salary hikes. 

Residential real estate may get a boost only if there will be larger arrears one time pay out.

But, this 7PC induced liquidity may also pose a risk of higher inflation in our economy, if consumers really indulge in the expected buying spree. 

Also, with the central Govt implementation of 7-PC, other states will have to increase their salary structure for the state Govt employees also without any increase in productivity. This may put immense pressure on the overall combined fiscal deficit of our economy, but it may be a $50 bln stimulus package for our economy also. Travel & tourism may also get some boost for this 7-PC.  

Any way. in the short term, we may see big boost in the small ticket consumption (if those central Govt employees really spend as expected after getting more money in hand) and apart from the above sector, financials may also benefit significantly, because lack of adequate consumer confidence and concern for future generation, may force majority of the surplus money towards savings & investment related financial instruments (mostly insurance & fixed income products along with some moderate risk instruments, like MF etc).

As par some calculation, 7-PC induced liquidity may boost consumption by around Rs.50000 cr, savings by around Rs.30000 cr and GDP by 0.5% over the period of 2-3 years. Govt may also earn incrementally higher by ways increase collection from indirect & direct taxes.

Today Govt also passed the Model Shops & Establishments Act, which may pave the way for 24/7 malls, restaurants, multiplexes etc and combination of this with 7-PC hope, retail stocks also jumped (Shoppers Stop, Future Ent etc).

Metal & mining stocks also rallied decently after Govt cleared National Mineral Exploration policy (also a know factor, but need to go through the fine print also).

Notably, DLF jumped big after reports that the promoter family will infuse around Rs.10000 cr by way of preferential allotment from the expected stake sale proceeds of its rental arms (known factor) and also residential projects. But there is also some doubt about the actual amount of stake sale and nature of disbursements (at one tranche or in a staggered manner). As of now, DLF is expected to raise around Rs,15000-16000 cr by selling stakes and its overall debt is around Rs.22000 cr.

Nifty Gained By Around 0.80% Amid Doubt of "Real Brexit", BOJ Jaw Boning & 7PC Booster

Nifty Fut (June) closed around 8204 after making a low of 8155 & high of 8215.

Technically, for the expiry date tomorrow, NF need to sustain above 8225 zone for an immediate target of 8275-8340 area.

On the flip side, inability to sustain above 8225, NF may face some selling pressure and may fall up to 8155-8105 & 8075-8000 zone for tomorrow.

 

Today Asian morning session started with the same old "jaw boning" from the BOJ official and as par various reports, they had already intervened two days ago in a small way, when USDJPY was around 100 level. Subsequently USDJPY surged towards 103 zone and with that, we are witnessing some "risk on" trade in the global as well as Indian market.

As par various reports, probability of "Real Brexit" is now very low as of now and in the foreseeable future at least until end of 2017 because of ongoing political turmoil in UK. Article-50 will be only invoked by the new Govt/PM after Oct'16 (if at all) and then a fresh general election may be called with the main theme of this "Brexit" and only after invocation of the Article-50, formal negotiations with EU will start for any "real Brexit" or for getting "better terms".

In any way, although this type of public referendum of "Brexit" may put pressure on the UK Govt to act, but its not legally binding. So, all these will delay the actual process of UK exit from the EU by at least 2-3 years and till then there will be considerable uncertainties both on the "Wall & Real Street".

Looking ahead, UK Conservative Party's leader election/selection and their tone for the "Real Brexit" & BOE statement may be the driver tomorrow. 

There is also some market talk that FED may unleash QE4 as an excuse of "Real Brexit" and threat of another "US Recession".

Today as par expectations, Govt approved 7-PC recommendations, which entitles 20-25% salary hikes for nearly 1 cr central Govt & pensioners and payment of arrears in tranches. The overall structure of 7-PC & staggered nature may be more beneficial for small & mid ticket size of consumption than high ticket (like real estates etc). Subsequently, stocks of autos (specially Hero Motors/TVS in 2-W), consumer durable (such as Voltas) jumped today amid hopes of higher disposable income and more discretionary spending after salary hikes. 

Residential real estate may get a boost only if there will be larger arrears one time pay out.

But, this 7PC induced liquidity may also pose a risk of higher inflation in our economy, if consumers really indulge in the expected buying spree. 

Also, with the central Govt implementation of 7-PC, other states will have to increase their salary structure for the state Govt employees also without any increase in productivity. This may put immense pressure on the overall combined fiscal deficit of our economy, but it may be a $50 bln stimulus package for our economy also. Travel & tourism may also get some boost for this 7-PC.  

Any way. in the short term, we may see big boost in the small ticket consumption (if those central Govt employees really spend as expected after getting more money in hand) and apart from the above sector, financials may also benefit significantly, because lack of adequate consumer confidence and concern for future generation, may force majority of the surplus money towards savings & investment related financial instruments (mostly insurance & fixed income products along with some moderate risk instruments, like MF etc).

As par some calculation, 7-PC induced liquidity may boost consumption by around Rs.50000 cr, savings by around Rs.30000 cr and GDP by 0.5% over the period of 2-3 years. Govt may also earn incrementally higher by ways increase collection from indirect & direct taxes.

Today Govt also passed the Model Shops & Establishments Act, which may pave the way for 24/7 malls, restaurants, multiplexes etc and combination of this with 7-PC hope, retail stocks also jumped (Shoppers Stop, Future Ent etc).

Metal & mining stocks also rallied decently after Govt cleared National Mineral Exploration policy (also a know factor, but need to go through the fine print also).

Notably, DLF jumped big after reports that the promoter family will infuse around Rs.10000 cr by way of preferential allotment from the expected stake sale proceeds of its rental arms (known factor) and also residential projects. But there is also some doubt about the actual amount of stake sale and nature of disbursements (at one tranche or in a staggered manner). As of now, DLF is expected to raise around Rs,15000-16000 cr by selling stakes and its overall debt is around Rs.22000 cr.

Nifty Settled Around 0.40% Higher Amid "Stable" Global Market And 7PC Liquidity , Good Monsoon & Better GDP Hopes

Nifty Fut (June) closed the day around 8135 after making an opening low of 8085 and high of 8159.

Looking ahead, technically NF need sustain above 8090-8165 area for an immediate target of 8200-8280 & 8310-8340 zone.

On the other side, sustaining below 8090-8075 area, NF may fall to 8010-7985 & 7925-7875 zone in the near term.

Global market was steady from the Asian morning session today after BOJ jawboning & pledge of more "QQE". One of the Fed member's comment that Fed should consider rate cut again as a fall out of "Brexit" and to avert a possible US recession also helped the "risk on" sentiment.

But the political drama regarding "Brexit" continues and that dragged the overall sentiment to some extent and there was some market talk that Italy will unleash a massive stimulus/loan restructuring package for its distressed banking sector, which has helped to curb the volatility of the global market by some extent, but that may be a pure "dead cat bounce" amid short covering rally.

Now, it seems that there are two opposite camps in EU led by Markel (Chancellor, Germany) who wants not to put pressure on UK for "Real Brexit" & wait and the other led by Juncker (EU Commissioner), who wants immediate exit process of UK from EU. 

But, one thing is clear that, unless Article-50 is invoked by UK, there will be no informal/formal talks with EU for this "Brexit". All these events and political leadership vacuum in UK may delay the actual "Brexit" process and that is helping the "risk on" sentiment by some extent at this moment. But the uncertainty about the "real exit" process will continue to be a roller coaster for the overall global market sentiment in the foreseeable future. 

Meanwhile, with China quietly devaluing its currency & exporting its deflation to the other parts of the global economy may be the prime concern along with its credit bubbles.

Domestically, all eyes will be on the 7pc announcement likely to be made tomorrow with a staggered nature of pay out for the arrears. Nifty also go some "booster" dose after Govt official comments that there are visible green shoots in the economy now and with good monsoon, India can achieve 8% GDP fr FY-17.

Some of the stocks/sector, which outperformed/underperformed today:

1. JSW steel rallied today after reports of its fund raising plan for $2 bln from FII.

2. Siemens rallied by around 2.85% after the company got an order from Power Grid for Rs.570 cr.

3. HCL Tech declined by around 2.90% after media reports that the company has lost rebid orders approx $1.5 bln over the past two years.

4. Maruti rallied by around 1% after reports of production ramp up for some of its SUV models.

5. Idea gained today after analyst call yesterday, in which the company assured business growth (data market) despite impending R-JIO launch. As par the co, R-JIO may have limited impact.

6. Tata Comm closed the day significantly by around 1.5% higher despite opened higher by around 8% after definitive SA telecom deal in a classic example of "buy the rumour and sell the news".

Article Courtesy:

Apollo Hospitals: 1290-1260 May Be A Good Demand Zone--Expansion & Pharmacy Division Deleverage Plan May Help

Trading/Investing Idea: Apollo Hospital

CMP: 1303

Buy on dips around 1290-1275

TGT: 1336*-1355-1378*-1395-1418*-1480-1500*-1545 (1-3/6M)

TSL< 1260

Note: Consecutive closing (3 days) below 1260 for any reason, Apollo Hospital may further fall up to 1235-1205-1180 & 1130 in the near to long term (alternative bear case scenario).

Analytical Charts:

Article Courtesy: Frontiza.com

Nifty Settled Flat, But Below 10DEMA (8155) Amid Political Turmoil In UK/Brexit And Hopes Of Extended Monsoon & GST

Nifty Fut(June) closed the day around 8104 after making an opening low of 8048 and high of around 8130.

Looking the the technical chart, NF need to close above at least 8155-8200 zone for an immediate target of 8335-8350 & 8410-8510 area.

On the flip side, consecutive closing below 8075-8010 area, NF may further fall up to 7925-7870 & 7785-7720 territory in the near term.

After "Brexit" referendum in UK, all eyes are on the ongoing political turmoil there which is adding more uncertainty in the financial market. As par the rule, Article-50 need to be invoked in UK Parliament to initiate the process of "Real Brexit". But, as of now, it seemed that the "Leave" campaigners are not too much enthusiastic about that and various prominent "Remain" camp politicians/leaders are tendering their resignations along with the UK PM. As the thing stands today, Article-50 may be invoked (if at all !!) only after Oct'16 (after Cameron exit and a new PM took the office).

There are also some strong online petition by the "Remain" camp for a 2-nd referendum. All these political game of football may also be indicating that UK may hold an early general election after Cameron leaves the office.

On the other side, EU authority, specially Germany are putting immense pressure on UK to hasten the process of "Real Brexit" as soon as possible and apparently are not interested to offer any better package for UK to remain in EU as of now. Any formal negotiation will only happen after UK officially invoke Article-50.

Clearly, all these "Brexit Drama" are creating lots of confusions & uncertainties among market participants and both "Wall Street" & "Real Street" does not like so much uncertainty, which may continue for the next two years.

There are also some market talk that BOE will cut by 0.25% shortly and FED may also cut by 0.25% to return to ZRIP again in the July-Sep'16 meet in order to keep the market stable after post "Brexit" scenario. But market is not paying any attention to those scenario right now and even to the Chinese Yuan, which is devalued today against USD to record 6.68 level.

We have some sector specific movement today as:

1. Shares of IT cos (software service export) declined today for their hefty exposoure on EU market.

2. Scrips of FMCG and rural economy oriented cos rallied today by some extent after IMD predicted extended monsoon this year.

3. Oil marketing & Airline cos rallied today decently amid continuous decline of Crude oil as a fall out of "Brexit".

4. Pharma also rallied today after HC stayed the price controlling order of NPPA.

5. Some metal counters rallied today amid strength in copper prices.

5  Bharti Airtel declined today modestly after deferment of its Bangladesh JV.

Going forward, apart from GST & actual progress of monsoon, market will look into the June CPI number, Auto sales figure and appointment of next RBI Gov, which may be the next drivers of our market.

So far, as par various report, Gov may appoint an economist of Rajan's caliber for the post and currently there are four names (Urjit Patel, Kaushik Basu, Rakesh Mohan, Subir Gokran). Present SBI Chairwoman (Arundhati Bhattacharya), who is also a strong contender for the post, may be granted another year for SBI instead of RBI.

Article: Courtesy: Frontiza.com

Black Friday: But Nifty Recovered Quite Smartly After Unexpected "Brexit" Jitters Amid BOE & RBI Assurances And Closed The Week 1.2% Lower

Nifty Fut (June) made a opening high of 8125 today (gap down by 157 points) and closed around 8075 after made a low of 7927 amid unexpected "Brexit jitters". 

Looking ahead, technically, NF has to sustain above 8105-8145 for an immediate target of 8180-8215 and 8295-8335 zone.

On the flip side, sustaining below 8060-8000 zone, NF may again fall towards 7925-7870 & 7780-7710 and 7610-7525 area in the near term.

The market recovered quite smartly today after EU spot market opened and BOE (Bank Of England) Gov Carney's pledge of liquidity support along with ECB's & BOJ's renewed commitment of unlimited QQE. Also, ECB started fresh round of another LTRO.

Meanwhile, our own RBI Gov (Rajan) who is also termed as "Rock star Of Dalal Street" also kept his cool about this whole "Brexit" event and assured the market for any type of appropriate liquidity support to avert the imminent crisis. 

Rajan also commented that "Sun does not fall from the sky" as of now for this "Brexit" referendum alone & there will be prolonged negotiations between UK & various stake holders in the next two years before any actual "Brexit".

This is very true as market will keenly watch the developments of any "Real Brexit" and I personally doubt, it will really happen at all. Eventually, UK will be offered much more better terms & deal to "stay" in EU at any cost, because in the scenario of real exit of Britain from EU may open a Pandora's box and many more EU countries will be in the line for similar referendum of "Leave" or "Remain", which will have a catastrophic effect on the whole concept of "EURO" itself and will proved to be a "failed idea".

But there will be ample uncertainties during next two years of negotiations between UK & EU and market does not like any prolonged uncertainty. Subsequently many Indian companies who has considerable business & manpower in UK may be also affected to a great extent.

There are also some talk of central bankers intervention in the market today (SNB/BOJ) to stabilize the market and G7 central bankers may also take some co-ordinated monetary action for an "orderly" market.

Its almost sure that there will be some stability/bounce back of the market in the next few days after the initial dust settles, but this effect of "Brexit" will be a long one. As UK PM Cameron will step down, it may be much more difficult for the new PM to deal with the EU despite the fact that resignation of the UK PM by Oct will delay the "Real Brexit" as its the new PM will will now do the "next process".

Among all the global markets, India outperformed the others quite smartly today as it fall by around 4% against 8-10% for others (at lowest point of the day).

Some of the reasons for this out-performance despite fatal combination of "Rexit" & "Brexit" may be:

1. Strong DII support unlike the era of 2008; Govt is also getting some big FII support too in time of such abnormal situation in the market.

2. Strong domestic consumption story of Indian economy and less reliance on export. But, most of the Nifty companies are related to global market also.

3. Comparatively less FII flow dependent from EU.

4. Fall in oil & other commodities are helpful for Indian economy.

5. Stable macros for Indian economy.

Going forward, BOE may cut by 0.25% in Aug or before, Fed will postpone any Sep'16 hike plan because of this "Brexit" excuse (actually may never hike again!), but there will renewed concern about China & US slow down and Yuan devaluation.

But despite all the factors, its almost certain that there will be huge volatility in the global as well as Indian market in the months ahead and as a trader or investor, we should take this volatility as an opportunity and as such technical levels might help us quite a lot as price discounted everything.

So, stay tuned and have a great weekend----

Market Wrap: Nifty "Surged" By Around 1% As UK Poll Started Amid Hopes Of "Bremain"

Today Nifty Fut (June) opened cautiously and gained momentum after Europe market opens and the latest pre-voting poll indicated 48% for "Leave" against 52% for "Remain". Another betting portal also confirmed that there is 74% probability of the "Bremain".

In any way, this"Brexit" episode may encourage some other EU nations to go for such referendum in future and this may be marked as a precedent.

NF made a low of around 8190 after opening at 8206 and surged to the high of 8307 before settling the day around 8289.

Looking ahead, NF has to sustain over 8335-8375 zone for 8410-8510 in the scenario of "Bremain".

On the other side, sustaining below 8260, NF will loose some of its strength and will fall towards 8190-8140 and below that 8060-7980 & 7870-7780-7695 area in the "horror" scenario of "Brexit".

One point is that market is not prepared for "Brexit" and already discounted the likely scenario of "Bremain" by a large extent. So, it may be another example of "Buy the rumour and sell the news" event.

 

Also the bond market rallied today on the back of good demand from corporate buyers and this also supported our market.

At 8400-8500 Nifty in the "Bremain" scenario, PE of our market will be well above 23 and historically 23-24 PE always invite heavy long profit booking.

Thus, we should maintain technical level more closely to avoid buying around the recent highest point.

Some of the scrips, which moved the market today:

1. Tata Motors gained in the hope of "Bremain".

2. Yes bank gained to life time high today after fund raising plan (QIP).

3. Sun Pharma gained after report of "buy back" of its shares.

4. RCOM gained after ICRA upgraded its debt ratings and imminent merger talks with Aircel. The company will also start 4G services shortly by using R-Jio's network.

5. Lupin gained after it got some ANDA approval from US FDA.

6. NTPC fall today after reports that it will offer 5% of its stake to its employees at 5% discount (which may dilute its EPS).

GBPUSD: What's The Chart Is Saying Amid Confusion Of "Brexit/Bremain" ?

GBPUSD: 1.4812 (CMP)

Sell around 1.49-1.51

TGT: 1.45-1.40*-1.35-1.30 (5-15 days & 3-6 months)

TSL> 1.5150 OR > 1.5250

Note: Consecutive closing (3 days) above 1.5250 for any reason, GBPUSD may further rally up to 1.56-1.62*-1.65 & 1.72 zone in the near to mid term (alternative bullish case scenario from the current trading level).

After the last week's tragic incident, though the "Remain" camp was getting some edge, the "leave" side is now apparently getting some traction after yesterday's Wembley TV debate.

Till few hours ago, various combinations & permutations of opinion poll still have "remain" camp leading by around 5%, after last night's two polls, which highlighted "leave" campaign leading by 1%. Rainy weather is another factor for the "soft minded" "remain" & "neutral/undecided" voters to go ahead out to cast their votes.

As of now various betting side also indicating almost 75% of implied probability of "Bremain". 

But, going by the price action, this higher probability of "Bremain" may be discounted to a large extent and except some whipsaw movement for about 6 hours after the favourable result, sellers may creep in after US opens.

Considering the risk/reward ratio, this may be again turned into another example of "Buy the rumour and sell the news".

Among all these "Brexit" drama, UK has fulfilled its objective to devalue its currency (GBP) without any "helicopter money". Its a great idea of another form of "QQE". 

UK has very good set of economic data over the last few months and despite that GBP depreciated to a great extent for this "Brexit drama". Now, even after "Bremain", Carney will not it to appreciate too much and may cut rate for an equilibrium rate in the interest of UK. 

Analytical Charts: