Nifty Fut (July) closed around 8359 after making
an opening low of 8310 and high of 8378 with a very narrow trading
range on the 1-st day of July Exp and Friday weekend.
Technically, NF now need to sustain over
8385-8410 for an immediate target of 8450-8510 & 8685-8785
zone.
On the flip side, sustain below 8335-8300
zone, NF may again fall towards 8255-8195 & 8135-8030 area
in the near term.
In this week, the overall moral of the "Brexit
Saga" is that GBP devalued by more than 12% (from 1.50 to 1.31)
& 18% (from 1.60 to 1.31) in the last one week and year
respectively.
UK Gov/BOE has done most of that without much
QQE (helicopter money), while others has to run almost 24/7
"printing machine".
Now, its almost certain that the "real
separation" process of this "Brexit Drama" will take at least two
more years to commence and there is considerable doubt that it
will happen actually at all !!
Really, UK is making itself a "laughing stock".
But, in the meantime, there will be considerable
political uncertainty in UK and that is not a good news for its
"real economy".
As usual, central bankers are ready for more
stimulus (QQE) and at the end of the day, combination of all these
jitters and QQE are helping to contain the overall volatility of
the market; i.e central bankers are full in control to define a
floor and ceiling of the market from time to time.
BOE is ready for more QQE apart from rate cut in
July-Aug and with that, we have evergreen BOJ/ECB.
As par some reports, it is increasingly difficult
for the ECB to purchase "eligible" bonds from the market and they
may have to resort direct equity purchase from the market as a
substitute of bond buying (on a lighter note---!!).
FED will be on the side line until at least
2017-18 and in the event of any "Real Brexit", they have to return
to ZRIP by cutting again !!
Among all these global uncertainties, bond yields
(US/Japan/Germany) are drifting towards all time low or even
negative and investors are chasing carry /commodity currencies and
risk assets, including Gold (as an hard assets also, Gold has
tremendous appeal) for better yields and returns.
Indian market was able to counter the initial
fatal combination of "Rexit" & "Brexit" jitters for some of
the following reasons:
1. Series of reforms measures announced by the
Govt on an "urgent" basis (FDI, 7PC implementation etc) on the
trading day, both after "Rexit" & "Brexit".
2. Proactive role by the RBI to contain FX (INR)
volatility.
3. Hope of extended & more than normal
monsoon in July & Aug (although in June, we have 10% less than
normal monsoon).
4. Hope for GST passage in the forthcoming
monsoon session of Parliament.
5. Hope for strong Q1FY17 earnings.
Globally, all eyes will be on the NFP data for US
next week, after this "Brexit" dust settles.
Also, our market will keenly watch the CPI data.
As par some interview comments of our DY. FM (Jayant Sinha), the
next RBI Gov/MPC may target WPI and not the CPI to set the repo
rate and if the present RRR of 1.5-2% is maintained with WPI, we
may have much lower repo rate than today, which will be in line
with the global standard. But, that may cause heavy bond market
sale also and INR may dip towards 71 level.
Thus, going ahead, volatility may be the theme of
the overall market and as a trader or investor, we should take it
as an opportunity.
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