Technical & Macro Analysis Of Indian & Global Market----: Nifty May Open Higher & Consolidate As US Bond Yields Halted And Hopes Of Dec Rate Cut By RBI As A Result Of Lower Inflation; But Concern Of Slower Economic Activity & Political Deadlock Over “Black Money” Issues May Continue To Hurt; Watch 8175-8125 & 8265-8365 In NF

Wednesday, 16 November 2016

Nifty May Open Higher & Consolidate As US Bond Yields Halted And Hopes Of Dec Rate Cut By RBI As A Result Of Lower Inflation; But Concern Of Slower Economic Activity & Political Deadlock Over “Black Money” Issues May Continue To Hurt; Watch 8175-8125 & 8265-8365 In NF

Market Mantra: 16/11/2016 (08:15)

As Par early SGX indication, Nifty Fut (Nov) may open around 8220 (+94 points) as US bond yields halted and Trump trades began to fade.

Oil is also supporting the “risk on” sentiment after it rallied significantly on the back of renewed optimism about production cut/freeze in the forthcoming OPEC meet aided by Saudi & Russia jawboning. But going ahead, Trump’s election rhetoric of an America independent on its own oil reserve and policy of more US oil pumping, thereby reducing oil import to a great extent (oil trade barriers) may hurt the sentiment.

Indian market sentiment today may be supported by the better/mixed macros (CPI & Trade Balance).

Yesterday, after market hours, CPI came at 4.20%, which is in line with estimates (prior: 4.31%). Trade balance reports indicate tepid trend of exports, although imports surged on the back of Gold.

After last few days “blood bath”, market may cover some shorts on the hopes of RBI rate cut in Dec’16 amid lower CPI figure. If average CPI stands around 4.5%, then RBI may set repo rate to 5.75-6% (4.5+1.25/1.5) theoretically; thus may cut 0.25-0.50% by Dec’16-Feb’17. But, in reality, RBI may watch the high probable Fed rate hike of 0.25% in Dec’16 and to maintain interest rate differential and INR stable against USD, RBI may wait until Feb’17 for more inflation data and actual Fed action. Also, RBI may also consider the present issues of cash flow, its short term effect on inflation and overall economic activity as a result of Demonetization.

Domestic market may watch the Political battle as the winter session of Parliament will commence today and progress of GST (final legislation) as a result of Govt’s “War” on black/unaccounted money. In the long run, Govt may need to lower the legacy of high tax regime in India to wipe out the basic cause of “unaccounted money” earned through legitimate way by the “common people” (like sale of lands/real estate etc).

Also the continuing battle (war of words) between Tata & Mistry may hurt the sentiment of Tata cos as well as the overall market sentiment as issue of Indian corporate governance is involved here.

Technically, after opening gap up today, NF need to sustain above 8190-8175* area for further bounce back towards 8265-8295* & 8365*-8395 and 8425-8485* zone for the day (bullish case scenario).

On the other side, sustaining below 8175 area, NF may further fall towards 8140-8105* & 8065-8045* and 7975-7925* zone for the day (under bear case scenario after positive opening).

Similarly, BNF (LTP: 19370), need to sustain above 19600-19650* area after opening gap up for further rally towards 19850-19950* & 20050-20200* & 20350-20450* zone for the day (bullish case scenario).

On the other side, sustaining below 20550-20500* area, BNF may further fall towards 19400-19300* & 19150*-19040 and 19000-18850* zone for the day (under bear case scenario).