Nifty Consolidates And Closed Flat After FM Hints About "Very Tight Time Schedule" For April'17 GST Roll Out

Nifty Fut (Sep) today closed around 8958 (-0.04%) after making an opening session high of 8990 and day low of 8942.

Time & price suggests that, for tomorrow sustaining below 8935 area NF may fall towards 8905-8860*-8825 and 8780-8725*-8670 zone in the immediate to short term.

On the other side, for more strength, NF need to sustain above 8975 area for 9025*-9075-9125 and 9185-9205/60*-9315 area in the immediate to short term.

Global cues was flat today in the early Asian session after overnight positive close of US EQ market on the back of tepid ISM Non-Mfg PMI (another instance of bad US economic data good for risk assets) and some reported confusion about BOJ's Sep policy stance.

But, soon after opening positive gap-up, NF faced some selling pressure today. One of the reason may be the FM's statement about "running against time" for April'17 roll out of GST and finalization of rate-RNR, which may attract quite a lot of debate in the days ahead (very pragmatic and practical aiming at preparing the market for late GST roll out).

Another point is that, if FY-18 budget will brought forward by one month (Late Jan'16), then preparation for the same will start from Sep-Oct'15 itself and in that scenario, it may look even more tough for the April'17 GST roll out. 

Indian market is not discounted yet for a late GST implementation and if its not possible by April'17, market will lookout for Oct'17 for the implementation of the same. But, given the busy state elections schedule, some doubt will also be there even for Oct'17 GST roll out.

FM also hinted that the ongoing economic reforms should also benefit voters (general people) and going ahead Govt may focus on blending of this reform along with social programmes. Clearly, by H2FY17, Govt will start giving more focus on the forthcoming state elections, specially in UP and 2019 general election.

As par the FM, looking ahead Govt will focus more on stalled infra projects issues apart from tax reform (GST) and resolution of banking NPLS; but there is little room for more rate cuts in the near future (Oct-Dec'16).

But, as par some reports, pulses rates are going down as more supply is coming because of domestic production thrust and import. So, going forward, headline inflation may come down towards 5% level by Dec'16 (??) and that should provide RBI for a 0.25% rate cut.
 

Today Indian market got significant boost from the PSBS as FM talked about some political consensus for privatization of the same, although its too early to think about that, as the main priority will be recapitalization and actual resolution of stressed assets of the PSBS as of now. Incidentally, NITI Aayog also recommended to sell 23 and to close 26 PSUS today.

Another factor, which is helping the banks is strong rupee (because of huge FPIS inflows) and subsequent fall in bond yields. Also, yesterday some private sector banks zoomed suddenly because of MSCI rejig portfolio buying by the FPIS.

Nifty was supported today by Bhel (+15% as Q1 result came significantly above consensus), SBI (fund raising plan by perpetual bonds), ONGC (hopes for above expected Q1FY17 result).

Nifty was dragged by Yes Bank (QIP may be below current market price and EPS dilutive) HDFC, Asian Paints, Axis Bank to some extent (long unwinding after recent rally).

Overall, we are very close to life time high of Nifty (9125 in spot) and as valuation is getting very expensive at 9000 level (TTM PE around 24.65), profit booking/long unwinding may emerge even for any funny reason.

SGX-NIFTY-07-09-2016