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.
But, after one week of "Brexit" referendum, UK/London property market is beginning to feel the punch of overall uncertainty and some prominent UK property funds suspended their redemption request. This may be the initial sign on the "real street" that the dominos have only began to fall and we may see some real jitters about this "Brexit" drama in the coming months.
Although, BOE is very proactive these days and is doing or will do "whatever is necessary" (unlimited QQE) to avert/counter "Real Brexit" risks, the overall extreme dovish stance and the uncertainty of "Leave/Remain" saga will drive the GBP lower towards 1.25-1.15 (now at around 1.3) and subsequently this uncertainty will spread to other EU regions. As a result, all others being equal, USD will gain strength against all other G-10 currencies except Yen. Strong Yen is now inversely co-related to bond yields and risk assets (EQ). If this Brexit uncertainty continues to go on, FED may cut again to return ZRIP as excessive strong USD will be bad for US economy too, which is facing a threat of another real recession.
But, after one week of "Brexit" referendum, UK/London property market is beginning to feel the punch of overall uncertainty and some prominent UK property funds suspended their redemption request. This may be the initial sign on the "real street" that the dominos have only began to fall and we may see some real jitters about this "Brexit" drama in the coming months.
Although, BOE is very proactive these days and is doing or will do "whatever is necessary" (unlimited QQE) to avert/counter "Real Brexit" risks, the overall extreme dovish stance and the uncertainty of "Leave/Remain" saga will drive the GBP lower towards 1.25-1.15 (now at around 1.3) and subsequently this uncertainty will spread to other EU regions. As a result, all others being equal, USD will gain strength against all other G-10 currencies except Yen. Strong Yen is now inversely co-related to bond yields and risk assets (EQ). If this Brexit uncertainty continues to go on, FED may cut again to return ZRIP as excessive strong USD will be bad for US economy too, which is facing a threat of another real recession.
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. China is steadily targeting 6.80 Yuan level on the "cover of Brexit" also.
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 and reflect growing RSS influence on the NAMO Govt.
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. But the expectation of incrementally higher trajectory of growth (GDP) may be hampered also by lack of sufficient "consumer demand" amid lacklustre global demand/growth, high corporate leverage & huge stressed assets in the Indian banking system (woes of twin balance sheet). Lack of private investments is a cause of concern despite India's relatively stable macros.
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
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