Nifty Snapped Two Days Loosing Streak Helped By Banks (Corporate Bond Rejig) After Dovish Fed And Moody's Upbeat Report About India Ahead Of New RBI Gov Announcement

Indian market today closed around 8679 (+0.55%) in Nifty Fut (Aug) after a gap up opening of 8655 (also day low) and session high of 8714.

Technically, NF has to sustain above 8725-8785* zone for an immediate target of 8825-8875*-8925 and 8975-9015-9075* in the short term.

On the flip side, sustaining below 8690-8640* area, NF may fall again towards 8590-8540*-8480 and 8440-8310-8250* zone in the immediate to short term.

 

After yesterday's dovish FOMC minutes, US as well as global markets recovered from loses and closed flat. In the morning Asian session, USDJPY was flirting below 100 level and the overall global cues was tepid despite blockbuster Australian job data as USD was getting lower against all major currencies. 

As usual, BOJ/Japanese Fin Min officials are on the verbal intervention mode to avert a USDJPY capitulation towards 95 level by stating that they are "watching" FX moves closely.

Overall FOMC minutes showed that Fed may not be in a hurry to raise interest rate at least till Dec'16. 

Going ahead, a host of Fed speakers may try to help Japan by stating that "Fed is going to hike sooner than later" (standard scrip).

But apparently, Indian market got a boost from Moody's stance, in which it retain India's GDP growth forecast at 7.5% for FY-16-17, but upgraded China's GDP to 6.6% (from 6.3% for 2016) & 6.3% (from earlier 6.1% for 2017) citing strong fiscal & monetary support from the Chinese Govt/PBOC. 

Moody's also upgraded EM outlook supported by stability, Govt/Central Bank support (liquidity) rebound in commodity prices but US election In Nov and Fed rate hike probability in Dec'16 may be some of the headwinds. Apart from US factor, rising uncertainty about real Brexit, protectionism and trade barriers may also be some of the jitters for the global financial market.

Although, China market actually closed lower today after Moody's upgrade, Indian market reacted positively, may be the market celebrated the much awaited 1-st medal in the Rio Olympics. 

China closed lower as higher than estimated GDP forecast by Moody's may also mean less stimulus by the Govt there.

Today's Indian market was supported significantly by Banks. As par reports, SEBI is going to rejig the much awaited Corporate Bond market in India and once approved, Banks can lend from the overnight RBI repo window against approved corporate bonds with some limits/restrictions. Previously, Banks can only borrow against Govt bonds. This step may also be helpful for a vibrant corporate debt market, which is still nascent in India and many corporates may access fund from this route rather than depending only on Bank finances.As a direct fall out of NPA mess, Banks are now increasingly reluctant to give corporates any fresh loans (except top graded corporates). New generation private banks, such as Indusind, Yes & Kotak banks may be the major beneficiary for this Corporate bond market rejig proposal as a significant portion of their fund requirement come from the overnight RBI repo/MSF window (wholesale funding). 

Bank stocks also got some boost as the Govt may announce name of the new RBI Gov by this week itself (hopes of market friendly dovish RBI Gov). 

But there may be more suspense for this as after meeting with the PM, FM stated that Govt will announce the name in due course of time and the media should not speculate about the appointment process (On RBI Gov: "You will know the conclusion and not the process"-FM)

With the growing uncertainty about the next RBI Gov, bond yield is rising as the actual Rexit comes closer and hopes of any Oct rate cut is diminishing with upper trajectory of inflation.

Today Nifty was supported by TCS after last two days 4% fall, cement counters (as India Cement result came good), Power Grid (Nomura upgraded it, citing project execution), Bharti Airtel (after news of stake buy by Singtel-SGX). 

ICICI bank was also in the limelight today as there was some reports that Tamsek is again buying in the counter after selling its stake in 2012 ahead of NPL/NPA news came public.

Nifty was dragged today by Coal India (buy back price confusion ?), LT (ex-dividend), Tata Steel ( as Steel ministry said that steel industry should increase its competitiveness and MIP may not be allowed after Oct'16), Infy, Wipro (Brexit fall out).

SGX-NIFTY