Market Wrap: 19/12/2016
(21:00)
Technically Nifty Fut (Dec @8127) has
to sustain over 8165-8205 area for further rally towards 8345-8395 & 8435-8485
zone in the near term.
On the other side, sustaining below
8090-8040 zone, NF may further fall towards 7980-7900 & 7840-7645 area in
the short term.
Nifty
Fut (Dec) today closed around 8127 (-19 points), almost flat (-0.24%) after making
a session high of 8149 and late day low of 8113 in a lacklustre day of trading
marked by holiday thinned low volumes and tepid global cues.
Indian
market today opened in a negative note and drifted further lower amid pressure
on China market (-0.5%) and renewed concerns on Monte Paschi bailout efforts.
China market was under pressure may be because of the “currency curbs” (USD) to
stem Yuan’s growing weakness (outflow concerns). Along with the “outflow
control” by PBOC, upbeat housing price data and its return of the “seized” US drone
has helped some drops in USDCNY.
EU
market was also under pressure after scramble in Monte Paschi Shares sale and
the disgruntled Italian bank was down by nearly 8% in the noon trade; although it’s
now almost certain that if the bank is unable to find any suitable investors for
its planned share sales, then Italian Govt will bail it out eventually by this
month, as ECB time is running out fast.
In
tomorrow’s BOJ meet, Kuroda is expected to stay pat after huge devaluation of
around 11% for the Yen in the last few weeks, since 8th Nov, after
Trump’s victory speech. All focus will be on the Kuroda’s presser and Q&A
to have an idea about BOJ’s thinking for 2017 after recent upbeat Japanese
economic data and exports on the back of a depreciated currency (Yen).
BOJ
may be less “dovish” in 2017 and may also hints for any tightening (rate hike
to zero from negative) in order to steepen the JGY yield curve and to keep
policy parity with Fed, which is also on the hawkish path and concern may be on
Chinese Yuan devaluation. Incidentally, due to negative bond yields, Japanese
banks fixed income (bond) portfolio is under huge MTM loss, which may be also
hampering their lending capacity for the real economy, affecting domestic
economy.
Thus
in 2017, hawkish Fed and less dovish BOJ, ECB and also PBOC may ensure that era
of “easy money” policy may be over and as the arsenal of the central bankers may
be fully saturated now, they will likely to reverse some of their QQE in order
to preserve it for “rainy day” and EM currency & financial market,
including India may also be under significance pressure.
Back
to home, Indian market was also very jittery amid ongoing demonetization chaos
and ever changing rules for currency exchange almost every other day. It seems
that Govt is really in some types of confusion as nearly 14 lakh cr of the old
currency has already deposited with the bank. Now, the big question is how much
will be able to return to the public after so much planned regulatory hurdles
and IT lens. The more time it will take for “redistribution”, India’s
consumption story may be affected more.
Today
all eyes were also on NAMO’s speech in UP for any stimulus designed for the “Aam
Admi”; but there was nothing except some indication for more times beyond the
50 days to bear the “short term pain” for “long term gain”.
All
eyes will be now on the 2nd Jan’17 public meeting of NAMO for any Indian version of “Helicopter
Money” (fiscal stimulus) and an imminent announcements for UP poll dates,
probably in early March (may be announced officially soon after 31st
Dec’16). Polls of the other 4 states may also be advanced to take care of the
present demonetization led “public support” and stance of “war against black
money/corruption”.
SGX-NF
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