As par early SGX indication, NF may open around 8780 following overnight positive US market (+0.62%).
Technically, for any strength, NF need to sustain above
8795-8835* area for
further rally up to 8875*-8905 zone.
On the downside, sustaining below 8755-35* area,
NF may fall towards
8700-8650 zone.
For BNF (LTP: 19600), for any strength, it need to stay above 19700-750* zone for further rally up to 19900-20005 & 20200 area.
On the flip side, sustaining below 19550-500* zone, BNF may further fall towards 19405-19300 & 19000 area.
Overnight US market was positive on the back of rally in oil and mixed economic data.
Oil was supported by favourable EIA inventory report and increasing optimism (??) about Nov OPEC meeting, where modalities of the recent production cut may be framed. As par some analysts, EIA recently changed the computation methodology for the inventory calculation and are taking oil imports nearly on "live" basis. This may be one of the reason for fifth consecutive favourable inventory draw down data by the EIA in US.
In any way, after the recent rally of nearly 12%, technically Crude (LTP: 49.50) need to sustain above 50.25 for and immediate target of 52; otherwise it may come down again towards 47-45 & 40 area in the near term.
As a result of below expected US ADP job data yesterday, SPF (S&P Fut) jumped as "bad data is now good for risk assets/EQ" for reduced probability of Fed action. But, SPF fall from the ADP inspired high after other economic data (Markit composite PMI,service PMI, factory order and ISM Non-Mfg PMI) came good (above estimates). This shows that the overall underlying strength of the US economy is not so weak and together with that "hawkish" talks by various Fed speakers has made the USD stronger with USDJPY at 1 month high. Market is now looking for a US NFP data of around 175k tomorrow.
But, whatever be the incoming data, Fed's action in Dec will largely depend on the actual outcome of the US Presidential election as Fed's decision this time may be more political rather than economical.
GBP also fall hard after UK PM's hard stance about Brexit.Europe trading was subdued on the back of speculation of an early ECB tapering, despite no fresh concerns for DB.
Back to home, Indian market may continue to assess the recent RBI policy and its long term effect on the overall economy after RBI cut the RRI target to 1.25% from the previous 1.5%.
Increasing India-Pak geo-political tensions and repeated incidents of cease fire violations at the borders & attacks of various army/BSF camps may keep the domestic market on the toes.
Credit default by the debt laden JSPL group may again bring the "old concern" of India's headwinds of "twin balance sheets" on the forefront again.
Although, market has not so much concerned about the planed redemption of FCNR to the tune of $15 bln as of now, some headwinds may emerge again as the event timeline will approach.
Overall, for any breakout from the 8875 level in NF may need some fresh positive news flow like above estimate earnings hope in Q2FY17, progress of GST on the ground and any incremental flow of policy reforms announcement by the Govt. As almost all the "good news" has been priced in, market may choose to take some profits in the long side in the absence of any fresh triggers.
Technically, weekly closing below 8735 area in NF, may make the chart weak from here. The same will be true for BNF for the level of 19500.
Analytical Charts:
SGX-NF
NSE-BNF
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