Nifty Turns Lower As Global Rally Led By Clinton Debate Cheer Fades Amid Renewed Concern About DB

Nifty Fut (Sep) today closed around 8730 (-0.06%) after making an opening session high of 8776 and late day low of 8898 amid last minutes short covering.

Technically, for tomorrow (28/09/2016), NF need to sustain above 8715-8695 zone; otherwise it may fall towards 8665/40*-8585/30-8495/30 area in the immediate to short term.

On the other side, for any meaningful strength, NF need to sustain above 8760-80 area for target of 8805/25*-8885-8925/95 zone in the immediate to short term.

Overall, sustaining below 8665 area, NF will be weak and may fall towards 8530 zone and sustaining above 8805 area, NF will be strong and may further rally towards 8995 area in the near term.

Today Indian market opened gap up following initial rally in the global markets after Clinton emerged as clear winner in the much awaited 1-st US Presidential debate. 

Although, there was no official declaration about the debate winner, the rally in Mexican currency (MXN-Peso) against USD confirmed this. Trump is being seen as against free trade (NAFTA) and has an idea of even building an wall on the US-Mexico border to prevent unauthorized immigration and free trade !! 

For the last few days, because of these types of tough talks by Trump, MXN was slumped significantly and today's rally may confirm some relief from the "Trump Jitters".

But, although probability of Clinton being the next US President is getting higher after the 1-st round of debate, there are two rounds more and its not clear about the partisan nature of the undecided voters after this debate. It appears from the debate that Clinton is much more prepared and composed for this debate, whereas Trump appeared sometimes as blunt. 

Though as an experienced politician Clinton is no doubt a better speaker, but Trump is basically speaking the language of the common man on the real street/economy and  working on the ground level & covering more electorates than Clinton. 

Thus, whatever be the outcome of the debate, its may be a very close fight this time and because of the populist & unpredictable style of Trump, market is worrying to some extent.

Oil was another factor for the global risk aversion today so far, just before tomorrow's vital OPEC meeting. Saudi Arabia/Iran & Russia are now less hopeful for any production freeze/cut.

Also, there was some concern for the Deutsche Bank (DB) as the scrip dropped by around 3% today after yesterday's 7% fall. With this the scrip lost almost 60% in 2016 as there is some serious liquidity concern & default fear going on among the market participants. Apart from the recent US-DOJ fine of $14 bln, the bank is also suspected for a huge derivative exposoure, much like of the Lehman Brothers. As par some reports, Germany may not bail out DB this time as this may be an exemplary event in the EU universe and many more banks may pop up (like Monte Parche of Italy). But eventually, DB may also be categorized as "too big to fall" and will be bailed out.

As there was virtually no meaningful global economic news, global as well as the Indian market was mainly dominated by the US Politics & the uncertainty about the outcome of the Nov election. 

Market is not prepared for any "Trumpism" at this point of time and at the same time a Clinton win will virtually ensure the Dec Fed rate hike. 

Thus, it may be a type of catch-22 situation going ahead along with some other global headwinds like "Real Brexit", Dec-4th Italian referendum and China/EU banking/credit crisis probability, market may catch good volatility in the coming months.

Another point is that with record number of stocks (11) in the FNO banned category for taking fresh positions, market may see some volatility in the coming days.

Today, Nifty was supported by IT & Pharma stocks as Trump defeat may be positive for them (Trump is dead against China,India. Mexico trade/exports into US in lieu of American jobs).

Nifty was dragged mainly by banks, autos and infra stocks.

Globally, all eyes will be on the ongoing US politics, UK & US GDP data this week and BOJ stance (as Yen continues its strength despite jawboning by Kuroda and various Japanese authorities).

Technically, today we should watch 2130 level in S&P-500 Fut for further cues of the global as well as the Indian market trend in the coming days.

 

 

 

NSE NIFTY-FUT