Nifty Soared To New 2016/Eleven Month High Supported By Positive Global Cues Amid Talk Of BOJ "Helicopter Money" Aided By Idea Of "Bernanke"

Nifty Fut(July) closed the at 8491.50 after making a opening low of 8422.35 and high of 8495.50. Today's rally was mainly supported by positive global cues following overnight US market rally amid blockbuster NFP data and talk of more stimulus by BOJ/Abenomics. 

Technically, now NF has to sustain above 8550-8575 area for an immediate target of 8665-8685 & 8785-8875 zone.

On the flip side, inability to sustain above 8550, more sellers will come in and NF may fall towards 8495-8405 and 8375-8305 & 8270-8195 area.

Around 8500-8550, Nifty has rallied almost 25% from the budget day (Feb) low and TTM PE will be around 23.50, which may be a cause for concern as valuations may be quite expensive/stretched.

Some of the primary reasons behind the recent rally despite shock of "Brexit" & "Rexit" may be:

1. Hopes of further QQE by the major central banks (BOJ/ECB/BOE/PBOC) apart from the dovish FED.

2. Hopes for rate cut in Aug by RBI.

3. Hopes for passage of GST in the forthcoming Parliament session.

4. Hopes for good corporate Q1FY17 numbers.

5. Hopes for PSBS recapitalization (Govt may soon announce a package of Rs.23000-25000 cr for the PSBS).

6. Hopes for incrementally higher consumer demand as a result of 7PC induced liquidity.

7. Hopes for better monsoon this year (so far 1% above normal till last week; improved from 6% below normal in the June end).

As par various reports, present Niti-Aayog VC (Arvind Panagariya) may be the next RBI Gov and we need to watch the market reaction after official announcement.

Global update:

 

After wining an impressive electoral win in Japan on this weekend, PM Abe swiftly took some decision to add more stimulus and reportedly asked his FM to design an economic package to stimulate domestic demand in Japan (most probably by some type of construction/infra bonds offering near zero interest to spur infra demand and jobs). The speculation is further aggravated by the visit of inventor of the "Helicopter Money" (infinite QQE), Bernanke to Japan, who may be of some type of "advisor" for the "Abenomics" in Japan. This may be the main reason for today's global as well as domestic market rally apart from Friday's blockbuster NFP data.