Nifty May Open Flat And Stay Range Bound Amid Drops In USD After Upbeat Assessment Of Japanese Economy & Positive China Market; But Domestic Headwinds May Continue To Drag

Market Mantra: 21/12/2016 (08:30)

Watch 8070-8000 & 8145-8205 Zone In Nifty Fut (Dec), Which May Open Around 8115 Today

Domestic market may be confused by apparent contradictory post- demonetization currency flow figure given by RBI and there may be also concern about adequate remonetization in the coming days due to logistics issues; as of now around Rs.14.5 lakh cr of demonetized notes may have been already deposited with the banks !!

As par early SGX indication, Nifty Fut (Dec) may open around 8115 (+7 points), almost flat despite positive overnight record closing of US market and positive Asian cues. USD dropped to some extent, as Yen gained some strength after upbeat assessment of Japanese economy by Abe Govt (sounds little hawkish).

Although, yesterday BOJ statement also mentioned about upbeat Japanese economic assessment, it was Kuroda’s Q&A comments later in the presser that BOJ will continue to purchase ETF and there is no thinking of any tapering as of now sounds like a “dovish” BOJ and USDJPY got some strength.

In China, there was some ease of restriction for Stock index (ETF) buying and thus after recent spate of heavy correction; market may be recovering to some extent.

But, growing geo-political risks in EU as a result of recent terrorists attacks in Germany, Turkey may be also a source of headwinds for the global market in the days ahead.

Any confirmed news of bail out of the fragile Italian Banks, including Monte Paschi by the Italian Govt may also boost the “risk on” sentiment for few days/hours.

Back to home, against this positive Asian backdrop, Nifty may open almost flat amid ongoing concerns of economic slowdown & political disruptions as direct result of demonetization.

Any “Santa Gift” in the form of Income Tax rebates (revision of slabs) and other possible stimulus measures in the forthcoming “dream budget” may boost some market sentiment; but may also be viewed as a “populist measures” by the Govt keeping in mind to reduce the “short term pain” ahead of series of state elections, which may also cause fiscal strain on the Govt.

Going ahead, market may watch pace of remonetization, Q3FY16 earnings, and ongoing domestic political war & any progress of GST.

Technically, NF has to sustain above 8090-8070* area today; otherwise it may further fall towards 8040*-8000 & 7980/7950-7915/7900 zone for the day (under bear case scenario).

On the upside, NF has to sustain at least above 8145-8165* area for further rebound towards 8205/8225*-8285 & 8310*-8355 zone for the day (under bullish case scenario).

Similarly, BNF (LTP: 18131) has to sustain above 18025-17980* area; otherwise it may further fall towards 17900*-17800 & 17650*-17600 zone for the day (under bear case scenario).

On the other side, sustaining above 18375-18425* area, BNF may further rebound towards 18550*-18675 & 18775*-18925 zone for the day (under bullish case scenario).

 SGX-NF

 BNF