Nifty Faced Some Selling Pressure Amid GST Hang Over Despite "Neutral" Global Cues And Closed Below 8550; What's Next ?

Nifty Fut (July) today closed at around day low of 8510 after making a high of 8604 before the Parliament session starts. 

Looking ahead, technically, sustaining below 8480*-8440 zone, NF will fall towards 8405-8380 and 8295-8170 area in the short term.

On the other side, sustaining above 8545-8585 area, NF may target 8615-8685* and 8725-8785 & 8845-8875 zone in the near term.

 

The market saw some broad based selling pressure after the report that Govt may not table the GST bill in this week as expected and may do the same next week (most probably on 25-th July).

But from the ongoing jawboning of different leaders of the both the Cong & BJP camp, it appears that there may not be any broad based consensus among the two main political party as of now and BJP is also seeking a "consensus" based approach for passage of the same, deviating from the earlier stand of "voting" in the RS on the strength of the "like minded RS members & allies" without waiting for approval from the Cong. 

But, it may be a reality that without Cong's direct/indirect (abstain) support, passage of GST still looks quite tough. Given the current atmosphere of "Political Intolerance" (as commented by the Cong leadership) & tepid situation in the J&K, there will be no dearth of "issues" to logjam the Parliament this time too. Cong also want a written response from the Gov/BJP, regarding their (Cong) GST proposal. 

Thus GST may not not a "done deal" yet and the Indian market is not discounted/prepared for "No GST this time" too !!.

Basically, GST is now converted into a "political game of football" as both the main parties of India are trying to take the credit for passage of the same, eying the next general election in 2019. Incidentally, this is the same BJP, who blocked the bill in the UPA time for several years for several reasons.

Even if, GST is passed this time or in the next session (FY-17), it may not be implemented in reality until 2019 election for various legislative procedures and fear of inflationary pressure on the overall economy. So immediate effect of GST on the earnings & macros will not be reflected in the near term and market will concentrate on the Q1 earnings flow, management commentary, actual progress & distribution of monsoon, name of the next RBI Gov, Aug RBI meet for any rate cut and issues of India's "twin balance sheet stress" etc after the monsoon session is over.

In the last 30 mins, selling intensified today after HUL published its result, where volume growth came at 4% against expectation of 5%. HUL, being a bellwether of Indian rural economy, its tepid volume growth may also confirm that the rural India is still under some kind of pressure.

Today, Indian market was dragged by 

1. Telecom stocks (as some leading companies are slashing their rate ahead of R-JIO's 4G launch to grab the market).

2. ONGC & Oil India declined today by some extent after Govt order to pay royalties to the crude oil producing states at pre-discounted prices.

3. Sun Pharma rose today modestly, after its subsidiary SPARC got a license for a for a molecule to be marketed in US.

4. Axis Bank rallied decently today after RBI raised its FII limit.

Globally, there was no dearth of Japanese jawboning despite there was holiday today as one of the Abe cabinet minister commented that Japan has various QQE tools for further easing.

Today, UK also saw some "real benefit" of its "Brexit induced QE" (significance devaluation of GBP without any fresh QQE) as Japanese VC fund Soft Bank signed a M&A deal for $32 bln. UK may benefit a lot from its devalued currency (12% since Brexit) as it will make many UK assets attractive for corporate M&A activity, but Brexit related uncertainty may also be headwinds for both the "Real & Wall street" in the coming months despite assurances from the new UK PM that she is not in a hurry to invoke Artcle-50 and it will take at least two more years before any real action of Brexit will come.

EU market opened cautiously after "failed coup attempt" in Turkey over the weekend amid sad incidents of so much blood sheds. Going forward, Turkey may pose some kind geopolitical of headwinds in the Euro area.

When there is confusion and divergence of many views, as a trader or even as a smart investor, one should stay with technicals as time & price action is the ultimate----stay with us.