Market Mantra: 24/10/2016 (08:30)
As par SGX indication, NF may open around 8720 (+17 points) amid neutral global & Asian cues.
Technically, NF has to sustain over 8755*-8775 zone for further rally towards 8800-8890 & 8930 area for the day.
On the other side, sustaining below 8725-8705* area, NF may fall towards 8680/60-8620/8580* & 8545 zone as the day proceeds.
Similarly, BNF (LTP: 19730) has to sustain over 19800-850* area for further rally towards 19950*-20000 & 20200*-20350 zone for the day.
On the flip side, sustaining below 19700-650* area, BNF may further fall towards 19550-19500 & 19400-19200 zone as the day progress.
On Friday, overnight US market was flat amid fall in oil and good Q3 earnings (above expected). The broad theme was strength in USD and dollar index, which kept the oil lower amid some pessimism about effectiveness of OPEC output cut in the coming days despite various oil related jawboning. Also, oil hovering around $50, is prompting many offline oil output to come online, specially in the US region.
As par some reports, FPIS are net sellers for the Indian bonds after many months and this may be due to strength in overall dollar index and bottoming of US & other G-10 bond yields (??). Another reason may be likely divergent monetary policy between Fed & RBI, while Fed is preparing itself for Dec'16 rate hike and subsequent 1/2 yearly rate hike in order to adjust its decade old ZRIP policy to normal (??), RBI is exploring various options for further rate cuts after one more rate cut most likely in Dec'16 (??) or Feb'17.
As par various analysts, India is in a "sweet place", primarily for this rare combination of higher growth & lower interest rate, despite pain of twin balance sheets. But, at the end of the day this lower RBI repo rate need to be transmitted to the bottom of the economy and only then we can see some real "green shoots".
Apart from the Q2 earnings, which is largely on the expected line and may be already discounted, going by the expensive valuation of the market, all eyes will be also on the progress of GST. As par some reports, apart from rate, dual control mechanism may be another vital area, which may face some political & administrative issues for lack of consensus.
NF
BNF
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