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----
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