Nifty Fut (June) finished
around 8230 in a lackluster narrow trading zone after making a
high of around 8257 and low of 8206 and the market saw some
selling pressure in the last hour of trade.
Going forward, immediate support for Nifty Fut is around 8200-8160 and and sustaining below this zone, it may fall towards 8125-8100 in the immediate future.
On the other hand, sustaining above 8275-8295, Nifty Fut may rally further towards 8380-8405 in the near term.
Its almost certain that RBI will be on "hold" tomorrow and may put some emphasis on liquidity & NPA management along with full transmission of previous rate cuts of 1.50% (so far only 0.65-0.75% may be transmitted by the banks).
Apart from this, RBI commentary about prospects of future rate cuts (in Aug'16) and stance (hawkish or dovish) will be the key. RBI may wait for actual Fed action, Brexit poll outcome and distribution & quantum of monsoon for a final rate cut of 0.25% in Aug'16 in FY-17.
Also market will keenly watch the present RBI Gov's tenure and extension hints from Rajan itself, but he will most likely not oblige to make any such reference at such RBI policy meet.
Any way, there is tremendous pressure on the Govt to keep Rajan for another two years, but it will be interesting to see, if Rajan himself is ready for another term after so much humiliation from the top brass of the BJP/Govt and its not possible for the Swamy & Co to directly attack a RBI Gov, specially on the personal front without passive support from the very high levels of the BJP/RSS. There may be debate about RBI policy, but such personal attack about RBI Gov (Rajan) is very exceptional and perhaps not seen before.
In any way, there is tremendous trust of the institutional investors on Rajan and any confirmation or uncertainty about extension of his tenure may put tremendous pressure on INR and we may see a massive capital outflow from both the bond & equity markets as in the world of ZRIP/NRIP (very miniscule/zero or even negative bond yields), India is one of the few stable economy & democratic country, offering huge bond yields to the investors.
Globally, although there is virtually no possibility on any Fed rate hike in June/July'16 after horrendous NFP report on Friday, Yellen may keep some hawkish tone in today's speech as one month's NFP data is not sufficient for a sudden change in Fed's stance. As par some reports, there is now around 23% probability of a recession in US following the recent spate of various economic reports. But, monthly pay roll tax figures in US for May is not so bad as the NFP no. So, Fed will take all the cumulative economic data for the last few months for some neutral/hawkish stance for its own credibility.
Back to home, today there was some pressure on telecom companies (Bharti/Tata Comm etc) as R-Jio is reportedly preparing itself for a commercial launch and most probably, it may do so before coming Diwali/Festival season.
Apart from telecoms, Lupin, Sunpharma, TECHM, Maruti, Axis Banks are some of the counters, which dragged the index to some extent.
Scrips of PSBS helped the market to some extent amid their performance review with the FM but dragged in the last hour as nothing new was there.
The total amount of fresh capitals by the Govt under the recapitalization scheme (Indradhanush) is around Rs.75000 cr wef 2015 to 2019 and in 2016, Govt may infuse Rs.25000 cr in the ailing PSBS. As par some reports, there may be Rs.8 lac cr of stressed assets in our banking system and by FY-17, the figure may touch around Rs.11-15 lac cr. Thus, minimum 3 lac cr may be needed by the PSBS as fresh capital keeping in mind the BASEL-III norms.
Thus, Govt's initiative of "Indradhanush" may be too little & too late. Also, there is some fear mongering is going on for both the borrowers and lenders due to the massive NPLS and KFA issues and our FM has promised that the Govt will ensure "no sleep" for the defaulters keeping in mind that the lenders are also under "sleep less nights". Surely, there may be some hesitance and fear among the corporate borrowers and MSMES and thus normal lending and banking activity may be also affected going forward. But, some pharma companies may benifit as there will be huge demand of "tranquilizers" for this "sleep less"actor as indicated by the FM (---on a lighter tome !!).
Now the most vital factor is actual economic recovery and full capacity utilization, which will bring fresh cash flows and help to repay the banks. As par some report, Govt is preparing a "bail out packages" for steel sector for their NPLS, despite imposition of MIPS. This is clearly showing that "all is not good" for the steel sector despite so much Govt support as actual demand is not there as expected.
Any "bail out" package for some specific sectors (like steel) is not good for the overall economy and other distressed sectors may also seek the same. It will be also not good for the Banks as any CDR may be amounted to default.
Among all these volatile global & domestic news flows, market will also be volatile and as a trader/investor, we should make the trend as our best friend.
Stay tuned---
Going forward, immediate support for Nifty Fut is around 8200-8160 and and sustaining below this zone, it may fall towards 8125-8100 in the immediate future.
On the other hand, sustaining above 8275-8295, Nifty Fut may rally further towards 8380-8405 in the near term.
Its almost certain that RBI will be on "hold" tomorrow and may put some emphasis on liquidity & NPA management along with full transmission of previous rate cuts of 1.50% (so far only 0.65-0.75% may be transmitted by the banks).
Apart from this, RBI commentary about prospects of future rate cuts (in Aug'16) and stance (hawkish or dovish) will be the key. RBI may wait for actual Fed action, Brexit poll outcome and distribution & quantum of monsoon for a final rate cut of 0.25% in Aug'16 in FY-17.
Also market will keenly watch the present RBI Gov's tenure and extension hints from Rajan itself, but he will most likely not oblige to make any such reference at such RBI policy meet.
Any way, there is tremendous pressure on the Govt to keep Rajan for another two years, but it will be interesting to see, if Rajan himself is ready for another term after so much humiliation from the top brass of the BJP/Govt and its not possible for the Swamy & Co to directly attack a RBI Gov, specially on the personal front without passive support from the very high levels of the BJP/RSS. There may be debate about RBI policy, but such personal attack about RBI Gov (Rajan) is very exceptional and perhaps not seen before.
In any way, there is tremendous trust of the institutional investors on Rajan and any confirmation or uncertainty about extension of his tenure may put tremendous pressure on INR and we may see a massive capital outflow from both the bond & equity markets as in the world of ZRIP/NRIP (very miniscule/zero or even negative bond yields), India is one of the few stable economy & democratic country, offering huge bond yields to the investors.
Globally, although there is virtually no possibility on any Fed rate hike in June/July'16 after horrendous NFP report on Friday, Yellen may keep some hawkish tone in today's speech as one month's NFP data is not sufficient for a sudden change in Fed's stance. As par some reports, there is now around 23% probability of a recession in US following the recent spate of various economic reports. But, monthly pay roll tax figures in US for May is not so bad as the NFP no. So, Fed will take all the cumulative economic data for the last few months for some neutral/hawkish stance for its own credibility.
Back to home, today there was some pressure on telecom companies (Bharti/Tata Comm etc) as R-Jio is reportedly preparing itself for a commercial launch and most probably, it may do so before coming Diwali/Festival season.
Apart from telecoms, Lupin, Sunpharma, TECHM, Maruti, Axis Banks are some of the counters, which dragged the index to some extent.
Scrips of PSBS helped the market to some extent amid their performance review with the FM but dragged in the last hour as nothing new was there.
The total amount of fresh capitals by the Govt under the recapitalization scheme (Indradhanush) is around Rs.75000 cr wef 2015 to 2019 and in 2016, Govt may infuse Rs.25000 cr in the ailing PSBS. As par some reports, there may be Rs.8 lac cr of stressed assets in our banking system and by FY-17, the figure may touch around Rs.11-15 lac cr. Thus, minimum 3 lac cr may be needed by the PSBS as fresh capital keeping in mind the BASEL-III norms.
Thus, Govt's initiative of "Indradhanush" may be too little & too late. Also, there is some fear mongering is going on for both the borrowers and lenders due to the massive NPLS and KFA issues and our FM has promised that the Govt will ensure "no sleep" for the defaulters keeping in mind that the lenders are also under "sleep less nights". Surely, there may be some hesitance and fear among the corporate borrowers and MSMES and thus normal lending and banking activity may be also affected going forward. But, some pharma companies may benifit as there will be huge demand of "tranquilizers" for this "sleep less"actor as indicated by the FM (---on a lighter tome !!).
Now the most vital factor is actual economic recovery and full capacity utilization, which will bring fresh cash flows and help to repay the banks. As par some report, Govt is preparing a "bail out packages" for steel sector for their NPLS, despite imposition of MIPS. This is clearly showing that "all is not good" for the steel sector despite so much Govt support as actual demand is not there as expected.
Any "bail out" package for some specific sectors (like steel) is not good for the overall economy and other distressed sectors may also seek the same. It will be also not good for the Banks as any CDR may be amounted to default.
Among all these volatile global & domestic news flows, market will also be volatile and as a trader/investor, we should make the trend as our best friend.
Stay tuned---
Analytical Charts:
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