Nifty Fut (June) closed
around 8202 after making a low of 8154 and high of 8253 today.
Technically, NF has to
sustain above 8280-8295 for target of 8335-8350 &
8410-8510 in the near term (in the event of Bremain)
On the downside, sustain
below 8180-8140, NF will target 8110-8060 & 7995-7860 and
7780-7695 by the next few trading sessions (in the event of
Brexit).
Although, most of the polls
in UK indicating "Bremain" by over 6% majority, this is may not
be a foregone conclusion. Yesterday, there was some "big" TV
debate in Wembley Stadium (UK) and majority of the audience mood
was in favour of "Brexit".
Market is quite confident
that "Remain" vote will outnumber "Leave" as majority of the
undecided voters and even the current "Brexit" supporters will
vote for stability ("Bremain") on the D-Day.
Still there is some element
of uncertainty in this "Brexit" drama and market does not like
such "uncertainty". Now, as on day, the price action suggests
that market may have already discounted the "Bremain" scenario
by a great extent and we may see only 3-5% rally across the risk
assets classes.
On the other side, in the
terrible scenario of "Brexit", market may sold off by around 10-20%
over the next few days as it is not priced in or prepared for
that scenario. As par various reports, FTSE can fall by around
20%, Stoxx-500 by around 25%, S&P by around 10% in the
"dooms day" scenario of "Brexit", similar to 2008 Lehman Brothers
shock.
We personally feel that
"Brexit" will not happen and after "Bremain", we may see some
relief rally across various "risk" & commodity assets; but
precious metals may fall and Gold may dip to 1200-1180 level as
appeal of "hard assets" will loose to some extent after this
"Brexit" anxiety is over.
Yesterday's Yellen testimony/script
has nothing new, but Fed is clearly concerned about US growth
and "Brexit" event. Market now looking for US growth &
confidence Fed rather than any rate pause action by Yellen.
After all, there is no
visible growth in G-3 universe (US/EU/Japan) despite so much QQE
over the last decade or so and more over, its the "easy helicopter
money" which may be responsible for the present mismatch in
supply demand dynamics of certain commodities like oil,steel and
may cause next wave of crisis until there is a significant
re-balancing. If the major central bankers will indulge in
continuation of such "helicopter money", productions &
supplies of various commodities will be increased, while there
may not be any significant increase in the corresponding demand
without any structural reform. This will cause a significant
credit defaults and banking crisis.
Apart from the global
issues, our market was under some pressure today as Subaramanian
Swamy strikes again and this time against CEA Arvind Subramanian,
accusing him as an "American Agent" too !!.
Though market was relieved
to some extent after FM stated that BJP/Govt is not sharing the
comments of SS and its his personal view. But, again this was
the same case with "Rexit" and clearly SS could not make this
adverse comment about an important Govt policy maker and eminent
economist like AS without active/passive support of top leaders
of BJP/RSS.
Thus, if SS continues his
attack on AS like he did on Rajan, it may also be very difficult
for AS to "stay in India" too !! There are also some market
reports that SS may be the chosen as the next RBI Gov or FM and
that's why the internal politics of BJP/RSS is playing this game
of football. If this happens, then it may be a big negative for
our market, at least in the short term.
Announcement of the name of
next RBI Gov (Urjit Patel/Arundhati Bhattacharya/Subramanian
Swamy) before monsoon session of Parliament, passage of GST,
full implementation of 7PC & its liquidity oriented
consumption demand, visibility of continuous economic recovery,
success of telecom auction. PSBS mergers and NPA recovery may be
some of the triggers for our market in the coming days.
Today, there was some report
from UNCTAD that FDI to India may cross $60 bln on the back of
favourable policy environments and fresh green field projects in
manufacturing sector.
Notably, today Govt/cabinet
cleared the textile policy to boost the sector, but the textile
companies retraced to some extent as it was already priced in
yesterday itself and this may be another example of "Buy the
rumour and sell the news".
Tata motors also fall by
around 2.50% as "Brexit" may cause havoc loses for JLR.
Similarly Infy, TCS dropped on "Brexit" related global demand
for IT services fear.
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