Nifty Fut(Aug) today closed
around 8631 (- 0.53%) after making an opening high of 8694 and
session low of 8616.
Time & price action
suggests that sustaining below 8600-8575* area, NF may fall
towards 8530-8480*-8440 and 8275-8200-8105 zone in the
immediate to short term.
On the other side, for
any strength NF need to sustain above 8675-8690* area for
target of 8725-8765/8785*-8825 and 8875*-8925-8985 zone in the
immediate to short term.
Today's morning Asian cues
was supportive initially on the back of Kuroda's
jawboning yesterday about limit of NIRP in Japan (BOJ may go more negative
if condition required).
USD was also got some
initial boost, after Fed's Fischer commented that US is reaching
its economic goal for full employment and 2% core CPI (?) and
rate may be hiked sooner than later (by Dec'16).
Thus combination of Kuroda
& Fischer jawboning helped the USDJPY to sustain over 100 level,
but soon after that market realized that its a pure verbal
intervention on the part of the BOJ as the continuing strength
of Yen may be devastating for Japanese exports & economy and
USDJPY again sold off. This, along with Oil dragged the global
market later.
All eyes will be now on the
tomorrow's BOJ review of QQE & speech of Kuroda and Yellen's
speech at Jackson Hall on Friday to have an idea about Fed's
actual intention (to be hold in 2016 or not).
Going by the pain of Japan/BOJ for continuous strength of JPY despite routine verbal intervention, Yellen may help Kuroda at Jackson Hole speech by adopting more hawkish script about US rate hike in Dec'16 or even Sep'16 also (some what co-ordinated action/verbal intervention between Fed & BOJ to help Japan)
Domestically, all eyes was
focused on the appointment of new RBI Gov (Patel) as almost all
sections of the market and policy makers gave a thundering
"thumbs up" for him as he is the right candidate who can
continue the present RBI policy/Rajan's legacy properly.
While this is very true, but
market may be already discounted for a more "dovish" new RBI Gov
after "Rexit", who can unleash a "bazooka" for Indian economy.
As Patel is a known "inflation hawk" and RBI is also a "owl" (symbol of
wisdom/ever vigilant), going by the recent upwards
trajectory of inflation and projected path of the same in the
coming months, rate cut hopes of 0.25% is virtually nil in
Oct'16 or even in Dec'16.
Thus market sold off to some
extent along with rate sensitive scrips/banking stocks -PSBS.
Also, IMD/Sky Met comment
that India is going to have just normal rain fall (around 100%
of LPA) and not above normal (106% above LPA) as projected
earlier, may also dampen the sentiment.
Another important
development is that Govt is considering actively to present the
FY-18 budget by the winter session of the parliament, so that
all the required post-budget exercise can be completed by FY-17
itself.
Govt is also thinking the change of financial year from
the the present April-March to Jan-Dec as par international
practice, but this may be effective from the next year onwards.
If, budget is presented in
the winter session, then there may be some doubt about passage
of full GST bill in that session with final rate and in that
scenario, April'17 roll out may be quite tough. Already,
industry body asked for minimum six months after passage of full
GST bill for implementation and there is talk of Oct'17
implementation timeline.
Another point is that
because of 7-CPC and OROP payout with the Aug salary for around
Rs.34000 cr, Govt's fiscal math may face some hurdles and in
that scenario, Govt may cut its capex in the 2-nd half of the
current fiscal year.
Looking ahead, market will
keenly watch Patel's statement/action regarding OMO (Indian
version of QE), NPL management of the PSBS apart from inflation
outlook/monetary policy stance (dovish/hawkish or owlish).
As of now, there was not so
much comments about banking NPLS or pain of twin balance sheets
from Patel, who is primarily somewhat media shy (low profile).
Today Nifty dragged mainly
by Banks, Cement, IT, Pharma & Metals, while it was
supported to some extent by HUL, ITC, Bhel, Coal India, HDFC duo
and Yes Bank.
Nifty Fut-I
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