Nifty Snapped Six Day Rally On Weak Service PMI Data & Moody's Red Flag About India Amid Negative Global Cues

Nifty Fut (July) closed today at 8352 (down by 0.42%) after making an opening high of 8382.50 and subsequent low of 8342. The overall market was in a very narrow trading range today.

Looking forward, time & price action (technicals) suggest that sustaining below 8330-8300 zone, NF will fall towards 8230-8195 & 8040-7925 area in the short term.

For any strength, NF need to stay above 8385-8415 area for an immediate target of 8475-8515 & 8575-8685 zone.

Global market is also consolidating today with some negative bias after 6 days Post-Brexit/No-Exit "Relief Rally" amid lack of any fresh news from the UK's "Brexit/Bremain" saga. 

Market is also cautious ahead of Friday's NFP data for US and FED minutes.

But continuous rally in global bond markets are driving investors towards high yield commodity currencies (AUD/NZD) and this bond market rally may be also suggesting that "something is wrong" with the risk assets (EQ) amid high political uncertainty in UK and hopes of more central banks QQE. 

Also banking NPA crisis in Italy and some reports about probable Chinese Yuan devaluation are adding more volatility on the global market.

Back in home, Nikkei service PMI published today at 50.3 for June against 51 for may, which is the lowest in the last 11 months. Although, this is just above the boom/bust line 0f 50, it dampened the market sentiment quite a lot.

As expected, today's Cabinet reshuffle also did not help the market sentiment either as this exercise may be purely political, keeping in view the next series of state elections.

As par some reports, Govt is now "keen" to have a dialogue with the Cong for passage of GST in the forthcoming Parliament session. This may be showing that Govt is not too much confident to pass the GST in the RS without direct/indirect support of the CONG. The PM will be on "business tour" for South Africa from tomorrow and in that scenario, we can expect least about any serious co-ordination with the BJP-CONG this time also.

Incidentally, Moody's today expressed some real concern about India's slow pace of economic reform amid this "political game of football", despite hope of higher GDP.

Overall, technically, market was in extremely "overbought" zone after last 6 days rally and may drift towards 8000-7900 zone amid this negative sets of domestic & global cues. Only consecutive closing above 8415-8450 area in NF may change this scenario as of now.

Article: Courtesy