Market Mantra: 21/11/2016
(08:30)
As
par early SGX indication, Nifty Fut (Nov) may open around 8080 (+10 points)
following mild positive Asian cues after some drops in USD (DXY). EUR gained
slightly after Draghi comments that ECB may wind up QE gradually if inflation
is started to peak.
After
dust of “Trump rally” settles, some analysts are concerned over the perception
that “Trumponomics” may invite stagflation in US amid possibility of higher
inflation combined with lower growth. This, coupled with Trump’s trade
protection rhetoric (“America first”) may put US in an economic disaster as par
some section of the market.
Another
factor is that, in reality all the major reform policies and fiscal spending
may be subject to US congress approval. Although it’s a rare combination of
republican congress & a republican president now, still Trump may face some
hurdles in passage of any controversial bill from the congress.
Now
it’s almost certain that Fed is going to hike in Dec’16, all attention will be
on the Fed’s future guidelines of rate action in 2017 and overall it seems that
Yellen may prefer for a balanced approach of two hikes in 2017 under the new
Trump administration.
In
2015, apart from Fed hike in Dec, Fed’s dot plots of four hikes (??) in 2016
caused the significant market meltdown (risk off) apart from China’s Yuan
devaluation and capitulation in oil.
Thus,
going forward, Fed’s guidance may be more important for the market as Dec’16
rate hike is now almost discounted.
Back
to home, demonetization fiasco and the “surgical strike” on black money may
continue to drag the Indian market sentiment. Slowing economic activity, weak
consumer sentiment and tepid consumption may drag FY-17 GDP by at least 0.5%
and earnings (EPS) by around 5% from the previously estimated figure.
Apart
from the demonetization rhetoric, failure of consensus for the dual control
mechanism in the informal GST meet yesterday may also drag the sentiment of the
market. GST council may again meet officially on 24-25-th Nov for the same.
Although, Govt is still hopeful for the much publicized April’17 roll out of
the same, we may not be surprised too much to hear later that the Govt is
postponing the same to Sep’17 for lack of consensus and current chaos of
demonetization amid another political game of “ping pong”.
Winter
parliament session may be going for another “washout” amid this “war of words”
between various political parties including BJP. Eventually, it may be quite
tough for the Govt for passage of the full GST bill (CGST/IGST etc) in this
session and in that scenario, even Sep’17 GST roll out may looks difficult as
there will be a number of state elections.
Technically, NF has to
sustain over 8140* area for further rebound towards 8185-8215* & 8265-8285*
zone for the day (bullish case scenario).
On the other side,
sustain below 8115* area, NF may further fall towards 8065-8035* &
7975-7925* zone for the day (bear case scenario).
Similarly, BNF (LTP: 18980)
has to sustain over 18850* zone; otherwise it may further fall towards
18700-18650* & 18440*-18350 area for the day (under bear case scenario).
For any strength, BNF
needs to sustain over 19050* area for further up move towards 19200*-19250
& 19350-19500* zone for the day (under bullish case scenario).
SGX-NF
BNF
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