Market Mantra: 11/11/2016 (08:30)
As par early SGX indication NF may open around 8410 (-135 points) despite overnight rally in US Stock Fut (except Nasdaq for IT spending concern) and in fact Dow breached another life time record high with SPF also near life time high.
The main concern may be EM meltdown in currencies and continuous devaluation of China Yuan, which was fixed above 6.81 at six years low. The main theme was strength of USD across the board because of hopes of fiscal stimulus & cut in corporate taxes to stimulate private investments. But, exception was GBP, which shows strength against USD for soft Brexit notion & short covering.
Instead of earlier perception of "gloom & doom" in case of a Trump victory, the market is cheering it after initial meltdown because of his victory speech as "President" Trump, which was conciliatory and sounds quite different as "Candidate" Trump. He ran the election campaign on the theme of aggressive fiscal spending (Govt capex) to "rebuild" infrastructure of America and this may be the 1-st time since 2008 economic recession, that someone like a US President is talking about sizeable fiscal stimulus package.
Although, at this point of time, Trump & Co may not have any specific plan to implement his "dream" of creation of more jobs, required funding for huge infra spending offsetting the planned tax cuts and thereby causing ballooning fiscal deficit, but the mere talks of fiscal stimulus is sufficient to give strength to the USD along with Fed's planned rate hike in Dec'16 (now FFR is showing it around 84% probability of Dec rate hike).
Thus, USD is getting strength across the board because of interest rate differential probability and current bond yields equations. Bond markets is going for a tailspin and EM currencies and EQ markets are in pressure.
India, being a part of EM and also dependent on foreign fund flow to a great extent is not an exception, despite being a "sweet spot" in global economy.
Domestically, Bank stocks may be in focus today after yesterday's good run as RBI announced some SA4 restructuring measures, which may be positive for banks, but may also be largely discounted considering the time & price action.
All eyes will be also on various Q2 results today (SBI/Tata Steel/M&M etc).
Technically, NF has to sustain over 8485-8505* zone for any rally towards 8545/8565*-8605/8645 area for the day.
On the other side, sustaining below 8395-8365* area, NF may further fall towards 8315-8265* & 8210-8180* zone for the day in the further bear case scenario after gap down opening today.
SGX-NF
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