Nifty Closed Above 8500 Amid Supportive Global Cues (Power Of CB Liquidity) And Hopes Of GST Passage & RBI Rate Cut

Nifty Fut (July) closed at 8528.50 after making a high of 8534 and low at 8492.95 amid supportive global cues (expectation of BOJ/BOE stimulus & SNB rate cut).

Domestically, Nifty also got support from the hopes of Aug rate cut by the RBI amid talk of "Market Friendly" name of the next RBI Gov, GST passage in the forthcoming monsoon session of the Parliament and better Q1FY17 result (15-17% YOY growth is expected due to low base effect).

Technically, NF now need to sustain over 8550-8600 for an immediate target of 8675-8785 and 8845-8885 & 9015-9060 in the next few trading sessions.

On the other hand, sustain blow 8505-8480 zone, NF may fall towards 8435-8405 and 8350-8290 & 8235-8105 area in the short term.

Similarly, SPF has to sustain above 2150 for further rally up to 2175-2195 & 2215 area; otherwise it will come down to 2120-2090 & 2075 zone in the near term.

 

Although there was some concerns in the global market amid "Brexit" uncertainty (As newly selected PM of UK said "Brexit is Brexit"), Italian banking crisis along with concerns of Deutsche Bank etc, US market (SPF) touched a new life time high as "Power of liquidity" (QQE) does not care for any concerns.

But, some sense of caution for the global market rally is also there as market may be going much ahead of the reality and over expectation. If Abe failed to deliver as par over hype, then it may be another example of "buying the rumour and selling the fact". Global bond market is also flashing some "caution" signal.

Meanwhile, India's June CPI printed at 5.77% against market expectation of 5.73% (MOM: 5.76%) and IIP at 1.2% (Est: -0.4%; Prior: -0.8%), which should give some relief to the policy makers, but odd of RBI rate cut in Aug may also reduce as Govt may put it now on the new RBI Gov/MPC and RBI may prefer to wait for further development of the "Real Brexit" to have some weapons in the time of crisis and inflation trajectory for the next few months.

Today private banks (Axis,ICICI) gave significant support to the Nifty as HSBC/MS upgraded the sector citing 21% estimated loan growth for the same. ICICI Bank is also in the process of listing of its insurance arm (I-PRU) as par some reports.

Metal stocks also got some boost after Aloca's upbeat earnings. VEDL & Cairn also surged amid talk of imminent merger approval and report of Cairn going for a legal battle for the compensation with the GOI (for the capital gains tax episode).

HDFC continued its  gain after fund raising plans as par reports for the last few days.

ACC, Ambuja Cement gained to some extent after Lafarge-Holcim's deal and reports of better Q1 earnings growth for the cement sectors. 

IDFC Bank gained significantly after it acquired one of the TN based Micro Finance Co having nearly 99% recovery rate and extensive branch network.

Tomorrow NF & BNF will be in some selling pressure as higher trajectory of CPI, specially food inflation may bar RBI/Rajan for any Aug rate cut and Govt announcement of PSBS recapitalization may attract some long unwinding in the PSBS (which rallied significantly from the recent low and most of the expected positive news may be discounted by a large extent).

Article Courtesy: Frontiza.com