Market
Wrap: 08/11/2016 (16:30)
Nifty
Fut (Nov) today closed around 8564 (+0.52%) after making a late day high of
8589 and session low of 8507 on the back of overnight positive global cues
supported by “Clinton inspired risk-on rally”.
Technically, for
tomorrow (09/11/2016), NF has to sustain over 8575-8595* area for further rally
towards 8650-8705-8750* & 8800-8840-8875 zone in the immediate to short
term (bullish case scenario in case of a clear Clinton win).
On the other side,
sustaining below 8540*-8520 area, NF may further fall towards 8480*-8435-8400
& 8365*-8315-8265 and 8215-8170*-8040 & 7980-7900*-7690 zone in the
immediate to short term (worst bear case scenario in case of a split result or
clear Trump victory, which may caused more chaos than unexpected Brexit day).
Overall, in case of a
Clinton win, expect a NF rally up to 8875-8995 area by this week and a surprised
“Trumpism” can take the NF down towards 8000-7700 area in the worst case
scenario.
A
clear Clinton win may ensure “status co” and continuity of predictive policies,
but may also have some serious political controversies or even impeachment by
the Republicans for her e-mail & ISISI funding issues.
A
Clinton win may also ensure that Fed is going to hike in Dec’16 with a guidance
of 1-2 hikes for 2017 in order to ensure that it does not fall behind the
curve. Also, as the first lady President of US, Clinton (war mongering??) may
also instigate some serious geo-political tension with Russia because of Syria
issues. All these notions may ensure a limited “Clinton Rally” in the event of
a clear win also for global as well as the Indian market.
Moreover,
a Clinton win may ensure pressure on generics Pharma pricing in US along with
other trade barriers or protections, including H1B Visa matters as raised by
Trump, which is now a hot political issue at least for the man on the “Real
Street” and may be also bad for EM(s), including China & India.
Though,
a clear Trump win is very unlikely, given the fact that ultimately even the man
on the “Real Street” may vote for stability and predictability on the final day
rather than “Brexit” like uncertainty, anything can be possible in “love &
war” amid today’s unusual US election “war” and Clinton may have to fight
against the hard reality of anti incumbency and exports of jobs from US to
EM(s) like China.
A
“Trumpism” is itself may cause a “dooms day” like scenario for the “risk on”
sentiment for the global as well as the Indian markets, which may also force
Yellen (if she will be able to keep her job of course!!) to be on the side line
even in 2017 (forget rate hike in Dec’16 in case of a Trump win), at least theoretically.
But
a Trump win may also be USD positive because of his stance of various fiscal
& structural measures, rather than overly relying on monetary policies
(QQE) and that may force the new (??) Fed Chair to hike rates more rapidly in
the months ahead.
Thus,
be it Clinton or even Trump, USD is going to be strong and that may cause
significant outflow of funds from EM (s), like China, India etc and even from Oil
rich countries (SWF). This may be one of the reasons for the recent spate of
selling from the FPI(s) in the Indian market (EQ/Bonds).
Apart
from US politics, divergence of monetary policies between Fed & other G-6/10/20
economies may ensure strong USD in the coming months.
Thus,
volatility & direction of USD after US election outcome may decide the
future course of “risk on/off” for the global as well as for the Indian market.
Apart
from ongoing anxiety of US politics, Brexit & China jitters may be in focus
for the coming days. Today’s China trade balance & export data came much
below market estimate, which may also ignite another wave of Yuan devaluation
towards 6.95-7.05 area, after PBOC & Trump factor (?) devalued it quietly (without
much global noise) on the back of the Brexit & US election drama.
But,
some analysts do also feel that be it Clinton or even Trump at White House, all
has to abide by the harsh reality of US Political system and constitution
(Congress/Senate) despite pre-election bytes and eventually, market has to take
its own course as par the economic news as nothing significant will happen out
of known US policies, even if Trump wins tonight.
Apart
from the ongoing global geo-political events, Indian market sentiment may be
further dragged for the continuous firing and shelling (cease fire violations)
in the LOC (Pak), in which a number of soldiers & civilians died on the
both sides of the border.
As
par reports, Indian PM today has a meeting with three Chiefs of Army staffs to
review the overall scenario (Mini War?) at the border, where something serious
may happen at any point of time, keeping in mind that the US election process
is going to end shortly and we have series of state elections in the coming
months (specially UP & Punjab).
Technically, unless
& until NF closed consecutively over 8750-8800 area, all rallies including
the possible “Clinton rally” may be proved as “dead cat bounce”.
SGX-NF
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