Nifty "Plunged" By More Than 1% As Poll Prospect Between Clinton & Trump Narrows Ahead of US Presidential Debate and Liquidity Concern Of Deutsche Bank Again Pop Up

Nifty Fut (Sep) today closed around 8733, just shy off the session low of 8727 and an opening session high of 8822.

Technically looking ahead, for tomorrow (27/09/16), sustaining below 8715* area NF may fall towards 8665/35*-8580/20-8480/40 zone in the immediate to short term.

On he other side, for any strength, NF need to sustain above 8760 for target of 8805/30-8875/95*-8925/75 in the immediate to short term.

In the absence of any meaningful domestic cues, Indian market was affected by some global headwinds:

1. US Presidential debate, which is scheduled for tomorrow (Morning Asian Session) is being seen as some risk aversion. As par latest pool, margin between Clinton & Trump is being narrowed considerably and it may be a close contest. Today's US Presidential debate will be the 1-st among the planned three debates which will be viewed/followed by huge US voters as well as global watchers. These debates may influence the undecided voters in the days ahead. Lately, probability of Trump is getting higher after some recent set back because some of his controversial and out of context comments. Now, all his focus is on the "real street" of US rather than "wall street" and this may be helping Trump to some extent. Apart from the various incoming economic data in the coming months, Fed may be greatly influenced by this political event for rate decision in Dec.

2. There was also some renewed Deutsche Bank liquidity concern about the US-DOJ's claim of $14 bln, whereby the bank may be forced to arrange for necessary fund either by raising fresh capital or by selling some of its assets/portfolio. As par some reports, German Govt may not offer any financial assistance for DB and expect a fair resolution by the US authority by way of reconciliation (talks) or by legal approach.

3. There was also some China credit concern as BIS recently warned about the same. China's bank credits now around $30 trl which is almost 300% of its GDP and around 3 times of the comfortable level. Any serious capitulation & defaults by Chinese corporates and devaluation of its currency (Yuan) to avert huge outflow fear may be a major risk aversion for global as well as Indian market. 

4. Today Kuroda (BOJ) also talked about some disorderly movement in FX market (USDJPY) and ready to fire more "Bazooka" (NIRP) to stimulate Japanese economy. But, the overall tone of the BOJ may also be an indication of its QQE limit & its effectiveness and also showing some panic on the part of the central bank.

5. Renewed concern about "Real Brexit" also making a "risk off" environment in the global market, which is till now not prepared for the "official divorce" of UK from the EU and its contagion effect & uncertainty on the total EU universe. As par various UK leaders, Great Britain may invoke Article-50 by as early as Jan-Feb'2017 and may leave EU much before 2019 with focus on anti-immigration stance as spelled in the recent Brexit referendum.

6. Oil is another reason for the ongoing volatility in the global as well as Indian market. 

All these global events are also causing some rally in bond yields and shifting of fund flow from risk assets. India, also being a part of global economy may be affecting to some extent in the present cycle of "yield hungry" capital flow.

Indian market was also being affected by the present Indo-Pak geo-political tension and continuous "warmongering" in the media about some immediate military action by India after the Uri terrorist strike. Although, it appears that Govt/Indian Military force is in no hurry for an retaliatory limited military action and is preferring to take various diplomatic & political steps to isolate Pak and its economy to put pressure on the later, overall market sentiment is being affected to some extent. As par PM, regarding the Indus Waters treaty: " Blood & Water can's flow at the same time".

Going ahead, apart from the ongoing global headlines, Indian market may take cues from the forthcoming RBI policy event on 4-th Oct as there are some renewed hopes about Oct rate cut. On the weekend, RBI Gov hinted some dovish views about trajectory of inflation and downplays the GST effect on it and gave more stress about GDP growth.

Apart from RBI, progress of GST & FY-18 budget preparation may on the focus along with the Q2FY17 result reason.

Today Nifty was supported initially by RIL (favourable GRM & telecom play) & BPCL. 

Nifty was dragged most by ONGC (talk of 5% stake sale by the Govt later this year) & Tata Motors.

NSE-NIFTY FUT