Nifty closed the "GST" week by around 0.20% higher as market "salutes unanimity of Indian politics" despite doubts about GST implementation road map; Will Rajan give a "farewell gift" to the Nation on Tuesday ?

Nifty Fut (Aug) today closed around 8706 (+1.30%) just below day high of 8717 after making an opening low of 8632 and closed the week by 0.20% or around 20 points higher.

Technically, NF need to sustain above 8735-8775* zone for an target of 8875*-8925-8975 & 9015-9075-9185/9200* in the short term.

On the other side, sustaining below 8695-8655* area, NF may fall towards 8615-8560-8460* & 8350-8270*-8170 area in the next few trading sessions.

Today's global cues was muted despite yesterday's BOE rate cut of 0.25% (as expected) and extra QE of 70 bln GBP (slightly unexpected). After some initial cheers by the global markets (risk assets), US market closed almost flat as BOE clearly said that they are not comfortable with the idea of NIRP or even ZIRP and "Helicopter Money" too. With the latest cut, the market now is assuming this as "one & off" from BOE unless & until there is some nasty surprise like "real Brexit probability" or invocation of Article-50 in UK.

BOE also emphasized the necessity on the part of the May Govt to clear the current air of uncertainty about any real Brexit plan, otherwise UK real GDP may contract significantly in the years ahead.

There was some speculation in the EU session today that BOJ may pause the Japanese ETF buying which later found to be temporary and the initial USDJPY slump was recovered slightly.

All eyes will be now on the US NFP job data and anything above 200k with unemployment rate below 4.8% and hourly wage growth of above 0.2% (MOM) may help to abate the Abe nightmare of USDJPY falling below 100. At the same time, better than expected US job data may again bring back the Sep'16 Fed meeting as live, although in reality, Fed will do nothing until at least Dec'16.

Back to our market, it was really a "GST week" by all means. At the end of the day, although there is significant confusion/doubt about the implementation time table of April'2017 as there are various permutations & combinations about the GST rate structure itself, market cheered it today. 

As par the FM, rate of 18% is quite logical, but as par his revenue secretary, that is too low.

Various state FM(s) are also now pitching for a standard GST rate between 22-24%. Forget about April'17 GST, but market will also be very happy if GST will implement from April'18 onwards, but going by the various challenges of legislations, rate finalization, IT infra & other formalities and political factors (fear of runaway inflation and its effect on election result for the BJP), even April'18 GST roll out may be quite difficult.

But, this time various Indian political parties except AIDMK showed "unusual political unanimity & maturity" for passage of this most "sweeping" economic reform and that's the most significant part of it. 

Although, there may be "strategic game plan" among various political parties for this GST bill, which is hanging for now almost ten years, investors are hoping that the same "political gamesmanship" will be shown in passage for the next round of reforms in India, such as land bill and labour reform, which will pave the way for "ease of doing business" in reality.

Today Bank Nifty gave good support to the overall markets. Although, this time market is not expecting any rate cut from RBI on 9-th Aug, Rajan may also surprise the street by cutting 0.25% and announcing some other measures for NPL and overall liquidity management as a "farewell/parting gift" to the Nation/Govt.

Apart from that, continuous liquidity flow from FPI(s) & ETF funds also boosted the market. In July & Aug (till date) FPI(s) have bought around Rs.12959 cr in cash. From March'16 date FPI(s) cash purchase figure is around Rs.44093 cr, while DII sold around Rs.22426 cr; i.e. net institutional investment is around Rs.21667 cr.

Nifty also got some support after IMD's weekly update about monsoon, which is so far around 2% over the LPA and 6% above the normal for the last week. Mumbai, Raigarh, Pune region are now flashing with the much awaited rains (although excessive today) and this may also cheering the "dalal street" after a long dry spell for the last few months.

Today IT counters dragged the market as there was concern about Cognizant result and a block deal with Infy (at discounted market price).

RIL today rallied by modest around 2% after the reports of completion of its $35 bln petrochem project and "imminent" launch of R-JIO.

Asian paints also rose by around 1.4% after announcement of its capacity expansion plan.

Auto stocks rallied quite well today after reports that GST will help them in the longer term.

Bharat Forge rallied quite smartly around 15% despite bad result, but helped by the management guidance and the Q1 result may be already discounted as the stock was down by almost 40% in the last one year; thus massive short covering and fresh "value buying" on the perception that "worst may be over for the Bharat Forge".

Stock market is really a "future discounting machine" !!

Update: Today's US NFP report is simply blockbuster:

NFP (July): 255k against estimate of 180k; MOM: 292k; 3-M Average: 190k

Unemployment rate(July): 4.9% (estimate 4.8%; MOM: 4.9%); Participation rate higher at 62.8% against 62.7% (MOM)

Average hourly earnings(July): 0.3% (estimate 0.2%; MOM:0.1%)

USDJPY soared to 102 level and consequently SPF is up by around 0.80% and SGX Nifty now trading around 8740 (+35).

Update: GST

Some evening comments of the FM about GST roadmap may be indicating that finalization of GST rate will indeed be very contentious and there may be three slabs with the guiding principle that rates will be moderate (optimal), which does not increase the tax burden on the people/economy and also does not decrease the revenue of the states (revenue should be adequate to meet the state's governance needs).

Thus 18% GST standard rate may not be the the final , which is being assumed now for various pros & cons after GST. Revenue secretary is also of the same opinion and final rate may be 20% or above at 22%.

As par the FM, drafting three GST laws (CGST/IGST/SGST ??) and get them passed will take time and onus of implementation of the GST will be on all the state Govts.

FM may be the most articulate, practical & reasonable leader in the NAMO cabinet today.