Market Mantra: 28/12/2016 (08:30)
Watch 8050-7980
& 8085-8120 Zone In Nifty Fut (Dec), Which May Open Around 8035 Today
BNF need to sustain above 18000-18150 zone for
any further “Santa Rally”.
Tax
Reforms Talk By The Govt May Help; But Strong USD & Oil And FPI Tax Issues
May Also Be A Concern Apart From The Ongoing Demonetization Led Economical
& Political Disruptions
As par early SGX indication, Nifty Fut (Dec) may
open around 8035 (+11 points), almost flat following tepid global/Asian cues.
Overnight, US economic data (consumer confidence,
home sales, Mfg index) was upbeat & better than expected and in the
morning, Japanese economic data came mixed (IIP below estimate; but retail
sales was good/above estimates). As a result, USDJPY is gaining some traction
and except EUR, USD has some strength. Due to thin liquidity for Christmas
& Yearend holiday, ECB has suspended its bond buying for some days and that’s
helping the EUR yields at this moment.
Back to home, after yesterday’s direct tax reform
talks by the FM, NITI Ayog; i.e. panel of economic advisers of the PM has
suggested more direct & indirect tax reforms for India to continue its
economic reform and greater compliances & less corruptions (less creation
of unaccounted money).
Although, such tax reform should have been done
long before the extreme step taken like demonetization as was also suggested by
the former RBI Gov (Rajan), this will be definitely a positive step, if
implemented in the right spirit.
But, considering the present fiscal deficit
scenario combined for both the states & the centre and a huge fall in
revenue after sudden demonetization, it may also be very difficult to implement
a significant lower tax regime in the immediate future for the Govt. For tax compliances,
India need a robust IT infra and a social security types of cards as in a
developed economy’ Aadhar Card & PAN Card may help, if implemented in a right
way (data mining).
Apart from the tax reforms, “stimulus” & “dream
budget” talks and any further steps towards “war against black money &
corruption”, market will also look into the monthly auto sales, PMI & other
high frequency data for Dec to gauze the immediate real impact of the demonetization
on the economy and Q3FY16 earnings & GDP trajectory.
Demonetization led political disruptions may also
hog the limelight ahead of another pay day coming shortly; but an apparent
fractured “united” opposition may also be good for the BJP/Govt ahead of UP
elections.
Hints
for actionable trading ideas:
Technically,
NF has to sustain over 8085-8120* zone for further rebound towards 8170/8200*-8245
& 8295*-8345 area for the day (under bullish case scenario).
On the other
side, sustaining below 8050-8015* zone, NF may further fall towards 7980-7945*
& 7915/7890*-7840 area for the day (under bear case scenario).
Similarly,
BNF (LTP: 17875) need to stay above 18000-18150* area for further pull back towards
18300*-18450 & 18700*-18800 zone for the day (under bullish case scenario).
On the
down side, sustaining below 17700-17600* zone, BNF may further fall towards
17500-17300* & 17200*-16975 area for the day (under bear case scenario).
NF
BNF
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