Market Wrap: 21/12/2016
(17:30)
Technically Nifty Fut (Dec @8077) has
to sustain over 8145-8205 area for further rally towards 8255-8295 &
8325-8385 zone in the near term for any “Santa Rally”.
On the other side, sustaining below
8040-7980 zone, NF may further fall towards 7915-7875 & 7840-7645 area in
the short term; 2016 may end in a big “Doji” in the technical chart (indecisiveness),
if it close around 7950.
Looking at the chart, 8200 zone may be
now a big technical challenge for the NF and consecutive closing below that, it
may fall towards 7525-7425 area by next few weeks, when volume (FII) return to
the market.
Similarly, for BNF (LTP: 18095),
consecutive closing below 18000 zone, it may fall towards 16365-15300 area in
the next few months and present down trend may change only consistent closing
above 18750-18850 zone.
Nifty
Fut (Dec) today closed around 8077 (-22 points) in another day of listless
trading with six consecutive days of downtrend and finished the day around one
month closing low.
After
opening almost flat following positive Asian cues, the overall market sentiment
soon turned sour on the back of ongoing concerns about economic slowdown &
political disruptions as a result of demonetization and NF made an opening
session day high of around 8124 and late last minutes session low of 8073.
Selling
pressure in the market further accelerated after opening of European market and
subsequent renewed concerns about bail out efforts of the Italian Banks (Monte
Paschi) and a EU court judgment about Spanish banks to return excess interest
collections on home loans for around 5-7 bln EUR in a pre-2013 case.
Monte
Paschi was also under immense pressure as its present desperate effort to
secure funding from private investors for 5 bln EUR is not yielding any
positive result so far and its running out of time and also virtually out of
funds.
But, eventually, Italian Govt & ECB may not let it fall at any cost;
although an amount of around 52 bln EUR may be required by the Italy to save
its fragile banking sector, which was previously estimated at around 21 bln EUR
(ECB will have to print fast unlike RBI !!!).
Indian
market was also under pressure towards the fag end of the market amid continuous
flip-flops by the RBI/Govt regarding various rules of demonetization &
remonetization.
Also,
banks are not itself convinced about sufficient supplies of new currency notes
after 31st Dec’16, when Govt/RBI is planning to end the limits of
cash withdrawal from the banks. There may be still severe lack of sufficient currency
notes supplies in the banking system amid printing, logistic and also ATM recalibration
issues and some simple maths may be showing that, it will take at least March-June’17
for 80-100% normalization. All eyes will be on the expected meeting between the PAC & Fin Sec (instead of RBI Gov) tomorrow.
Indian
market may be also concerned about some unscheduled (?) long hours meeting
going on with the new defence Chief and the defence minister today for
possibility of another “surgical strike” at LOC (??).
All
eyes will be on the GST meeting tomorrow; although there is very little hope
for any consensus about dual control mechanism amid political disruptions.
Eventually, Govt may also “officially” accept that there are no chances of any
April’17 GST roll out and all hopes will then be on the Sep’17 implementation,
considering it’s a “constitutional compulsion”.
But,
eventually “political compulsion” may be more important than the “constitutional
compulsion” and in that scenario, it may ensure that GST will be implemented
only after 2019 general election and market is still not discounted for that.
All
eyes will also on the political developments after RAGA’s alleged “corruption
bomb” about NAMO for “kickbacks” by Sahara/Birla to see that if there is
sufficient elements in it for an expected “earthquake & subsequent tsunami”;
although hopes are very low as the matter is already under sub-judice (in Birla
case, SC already asked for more “credible” evidences and its a known factor to the market; but Sahara allegation may be new).
As
par some reports, high frequency economic indicators for Indian economy may
have dipped significantly in Dec after moderate fall in Nov and Q3FY16 GDP may
also dip by around 1.25%. Rural consumption & economy may be worst affected
more than urban consumption after demonetization led economic disruptions.
Apart
from the short term effect of demonetization, long term effect of the “war on
black money” may also cause at least 30-40% dips in high value consumption for
India.
All
eyes will be also on any “Santa Gift” & a “dream budget” for the nation by
the Govt to reduce the demonetization “pain”, just before series of state
elections, probably in Feb-March’17, ahead of schedule to take advantage of the
present “war on black money & corruptions”.
But
too much populist measures/stimulus by the Govt may also cause significant
fiscal deficit for the centre and if we consider state fiscal deficits &
the present fall in revenue after demonetization, combined fiscal deficits
might be worst in the coming months.
The
expected burgeoning combined fiscal deficit may be one of the reasons for the FPI(s)
to exit the Indian bond markets (G-SECS) at a record pace apart from the country’s
“political risk” after demonetization combined with the safety of USD and
perception of “Trumponomics”.
SGX-NF
BNF
No comments:
Post a Comment