Nifty Fut (July) closed at
8513 after making an opening high of 8545 and subsequent low of
8501.10 today.
Looking ahead, NF has to
sustain over 8555-8585 for an immediate target of 8605-8685
& 8745-8885.
On the flip side,
sustain below 8480-8450 zone, NF will fall to
8405-8365 & 8305-8240 area.
In the morning Asian session,
USDJPY and global market retreated to some extent after a
Japanese PMO official (PM Advisor) poured cold water on the much
hyped "Helicopter Money" terming it as an extremely risky gamble
of the idea of direct credit to the consumers rather than through
the banking system.
As par the Abe advisor, the
best way to create demand and fight deflation & spur growth
in Japan is to co-ordinate monetary and fiscal policy instead of
the real "Helicopter Money" (non-conventional monetary
measures).
Later in the day, after EU
market open, another Japanese Fin. Min official confirmed the
plan of QQE and global market/USDJPY recovered some lost ground,
but reaction of the Indian market was somehow muted.
Chinese trade data also
showed that internal demand is still tepid and indicating somehow
slower growth in the coming days, It also means that China may
further devalue it currency but the market reaction was muted
amid talk of BOJ/BOE stimulus.
Today, May will take charge
from Cameron as the 2-nd Female PM of UK. All eyes will be on
her statement regarding "Real Brexit/invocation of Article-50",
appointment of the finance & "Brexit" minister and debate of
"Brexit" in the UK Parliament in the coming days.
Market will also eagerly
look for tomorrow's BOE action and statement.
Today, Indian market showed
some early symptoms of exhaustion after nearly 25% rally
(8545-6836 in NF) in the last five months (from the budget day
low). At around 8550, Nifty PE (TTM) is around 23 (FY-16 EPS at
370.60) and valuation may be quite stretched.
If we assume 15% earnings
growth in FY-17, then the FWD PE will be around 20, which may be
also quite expensive at Nifty 8550 (FY-17 projected EPS at 425).
In any way, apart from
de-leverage led growth in bottom line, market will watch actual
growth in the top line (sales/EBITDA), which is more important
and private capex revival with improved capacity utilization.
Yesterday's high CPI at
5.77% may act as some dampener as 22 months high inflation may
bar RBI for any rate cut in Aug by the departing Gov (Rajan).
Also improved IIP figure may relieve some pressure on the
RBI/Govt to ease policy rate urgently. Thus, banks were under
pressure today.
Market will eagerly watch
the trade balance & WPI figure tomorrow (estimate 1.19%) and
announcement of the name of the RBI Gov in the coming week.
There was also some
unconfirmed market speculation that Govt is very keen to use the
RBI buffer for the PSBS recapitalization and some other fiscal
stimulus for the economy, but RBI Gov (Rajan) is dead against it
(which may be one of the main reason for "Rexit" also). Usage of
this buffer fund may spur inflation in the economy and put the
entire Indian banking system (PSBS) into some type of severe
risk.
Also, arrest of Jignesh Shah
(NSEL Scam) may put some pressure on the overall market sentiment
as many "Big Fish" may be caught later on.
Oil marketing companies
gained today after Govt allowed them to increase the retail price
of kerosene by 0.25 paisa every month till 2017.
NBCC slumped today as Govt
decided to divest its 15% stake at around Rs.1700 cr (OFS price
may come lower wrt the prevailing market price for the last few
days).
Metal counters continued
their rally amid surge in global iron ore & copper prices.
VEDL & Cairn also surged
amid approval of merger, although LIC denied it yesterday.
Article Courtesy: Frontiza.com
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