Market Mantra: 19/10/2016 (08:00)
As par early SGX indication, NF may open around 8680, almost flat following neutral global cues coupled with "at par estimate" morning Chinese economic data.
Time & price action suggests that, NF has to sustain above 8700-8720* zone for further rally towards 8755/8785*-8815-8875 area for the day.
On the flip side, sustain below 8665-8635* area, NF may further fall towards 8590-8560/45*-8500/8465 zone as the day proceeds.
Similarly, BNF (LTP: 19510) has to sustain above 19600-19650* area for further rally towards 19850-19950/20000* & 20200-20350 for the day.
On the other side, sustain below 19450-19400* zone, BNF may further fall towards 19300-19200 & 19040-18900 zone as the session progress.
Overnight US market closed 0.42% higher, almost flat as par the Indian market closing time yesterday. Although core CPI came just below estimate, market participants realized that average core CPI and other US economic data are not so bad that it will change the mindset of Fed for a Dec rate hike.
USD was weak to some extent, because of strength in GBP as the High Court indicated that UK Parliament may have to vote for the Brexit/Article-50 invocation; although the final order will be given after some days (ASAP).
Today's morning China GDP came just as par estimate at 6.7% (YOY); but IIP was not good and came at 6.1% against estimate of 6.4% (prior: 6.3%).
Overall, recent official Chinese data, if taken at their face value, may be indicating that the major engines of the economy is moving in different directions (trade data/CPI//housing market & debt crisis/GDP). Another worrying factor is that debt to GDP ratio in China is now almost 275%, which may be quite serious and not sustainable in the mid to long term. A "good" China GDP data may also underscore of any immediate scope for monetary stimulus.
Back to home, Indian market will focus on ongoing Q2 earnings with RIL result tomorrow. As par some reports, Sep GRM may not be good for the RIL.
Market will also watch keenly the ongoing GST meeting and as par some reports, there may be four/five GST rates (6-12-18-26 & 40 % and extra cess for meeting any revenue deficit by the states).
On the other sides, states are demanding higher rates by at least 4% from each category.
Such multiple taxes & cess on that may also underscore the basic concept of GST as one point simple tax and may not help the economy as expected.
Yesterday's RBI.MPC minutes revealed that although RBI is worried about inflation uptick in the coming months, its equally concerned for growth and credit inflow/rate cut transmissions.
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