Nifty Fut (June) closed
around 8130 after touching a low of 8082 and high of 8147.
Looking ahead,
technically, NF need to sustain above at least 8185-8205 zone
for any strength towards 8235-8295 and 8335-8350.
On the downside, sustain
below 8165 area, NF will fall towards 8060-8000 &
7950-7910 area by the next few trading sessions.
Meanwhile, after horror IIP
figure on Friday, May'16 CPI just came around 5.76% against
expectation of 5.60% (MOM: 5.39%), which may make any rate cut probability
by the RBI in Aug'16 more remote as we may see similar uptrend
in CPI for June also as most of parts of India were reeling
under severe heat wave amid higher oil prices.
The Asian trading week
started today in a weak note amid renewed fear of "real" Brexit
and tepid China data (IIP: 6% against 6.1% expected; retail
sales 10% against 10.1% consensus; fixed asset investment
printed as 9.6% against 10.5% expectation). The weak China data
may be an indication that "all is not well" at all in China and
PBOC may have to cut further to stimulate the economy, which may
weaken the Yuan (CNY) more.
Global market also spooked
by overnight massacre of US shooting incident, which may be the
worst of this kind in the US history.
Going forward, today's ICY
poll on Brexit may influence the global market as no significant
US will be released today, ahead of Fed meet on 15-th June and
Brexit vote on 23-rd June.
Now, probability of passage
of GST in the forthcoming monsoon session of the Parliament
along with actual progress & distribution of monsoon may be
the drivers of our market in the coming days.
Govt is relying heavily on
the smaller regional political parties to pass the same and
after that, another spate of passages in the respective state
assemblies, it is expected to be implemented by April'17.
Looking at the various
political permutations & combinations along with next state
election schedules, passage of of GST at this point of time without
direct or indirect support of INC looks very difficult. Even if
GST has been passed, it will be very interesting to see that
Govt is really serious to implement it before 2019 election as
some section of BJP/RSS may be very concerned about inflationary
impact of GST in the overall economy. Though, the tax credit benefit
of GST may be visible only after 1-2 years after implementation,
its inflated effect of more service tax (from present 15% to
18%) may be immediately visible and Govt may not risk the common
public's (voter's) mind just before 2019 general election.
On the other side, general
business community/traders and corporates also may not be ready
for nationwide roll out of GST at this point of time amid
significant stress in their balance sheet and tepid real
economic recovery/private investments as implementation of it
may require substantial investment in IT infra too.
Precisely, for this reason,
Cong may lend direct or indirect support to pass GST for
nationwide implementation of the same wef 2017, just two years
ahead of 2019 general election, so that common people will vote
against BJP amid increasing inflationary effect (a trap ??). It
will be interesting to see, if BJP/RSS will fall into this
Cong's "strategy trap" or not.
Amid all these political
game of "GST" for the last ten years, both BJP & Cong will
seek credit in the 2019 election for passage of it as it is the
same BJP, who opposed the same GST for five years, when they are
in the opposition.
Thus, even if GST will pass
in the forthcoming monsoon session, its implementation and
effect on the economy and corporate earnings may be reflected
only after 2019-20 and there may not be any dramatic effect on
the market expect few days of whipsaws. Another thing is that
anything above 18% GST rate may also be counterproductive for
our economy.
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