Nifty Slipped From One Year High Amid Disappointed Q1 Earnings, Confusion Of GST And "No Bazooka" From BOJ

Nifty Fut (June) today closed around 8585 after making an intraday high of 8652 and low of 8577.

Looking ahead, technically, sustaining below 8555-8505 area, NF may again fall to 8475*-8405 and 8385-8235* & 8105-8075* territory.

On the other side, sustaining above 8605-8665* area, NF may further rally up to 8725*-8785 and 8825-8875* & 9050*-9205 zone in the near term.

The selling intensified today in the last hour after some disappointed earnings from index heavy weights like DRL, Maruti, ACC.

There was also some confusion regarding GST passage in this monsoon Parliament session and as par some market talk, GST may be delayed this time also as there is no broad consensus among various states/stake holders regarding GST rate and some other issues.

As par some reports, Cong is not so much "amused" with the latest ED case against the its former Haryana CM (Hooda) and may not agree to co-operate with the Govt/BJP for passage of GST due to alleged "political intolerance" of the later.

On the other side, some question may arise for this "strategical blunder" on the part of the Govt/BJP as every time the Parliament session starts on the hopes of GST passage, some political issues are coming in from both the main national parties and GST is now the perfect target for this political battle, which going on almost for a decade now.

As par some reports, the Govt is now delaying the official announcement of the next RBI Gov and Kahshik Basu, who recently stepped down from the World Bank, may be

the front runner now. The Govt may announce the name of the next RBI Gov only after the last policy meeting of Rajan in Aug'16.

Today, Govt also officially notified implementation of 7PC from Aug'16 and that may bring some cheers both on the "Real & Dalal street" in the days ahead (Indian version of "Helicopter Money"), if the PSU employees are really interested to spend heavily on consumer items, Autos, Real Estate etc after getting 7PC induced liquidity.

Today, Nifty dragged most by DRL, ICICI BK, Hero Motors, while supported by Axis BK, Tata Steel & Power Grid.

Global market was in some types of exhaustion today in the morning Asian session after some reports that BOJ will unleash only 6 tln Yen against the market expectation of 20-30 tln Yen stimulus package. If this will turn true, then one can expect huge selling in USDJPY and consequently risk trade will be "off" for a while, because Kuroda/Abe was supposed to come with a "Bazooka" instead of "water pistol" to stimulate the sluggish Japanese economy.

But, more than QQE, some structural steps might be necessary for Japan as its fighting a demographic war (growing old age population/work force) with little immigration (growing foreign workers like in US/EU). Also a strong Yen may be devastating for the Japanese exports and put the entire episode of the Abenomics into serious doubts.

In the US, as par some early opinion poll, Trump is ahead of Clinton (46% vs 40%) in the presidential election, although various betting sites still projecting Clinton far ahead (70% vs 30%). Like Brexit (real), Trump may be also a great headwind for risk assets, if finally elected as President of USA in Nov'16.

All eyes will be now on tomorrow's (27-th July) FED statements. As real Brexit fear recedes, various economic data coming out of US is getting stronger and FED may force for some hawkish script in its statement and may keep the Sep'16 meeting as "live", although Yellen may prefer to wait until Dec'16 for any token yearly rate hike, if any at all (after US Presidential election).

One should watch the movement of Crude Oil also as supply glut concern is getting higher & higher and below 42$ may play havoc with the risk trade.

Article Courtesy: Frontiza.com