Nifty May Open Gap Up On The Back Of Overnight Rallies In US Mkt & Return Of Normal CRR By The RBI On The Demonetized Excess Bank Liquidity(?); Will It Sustain ?

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

All eyes will be on the banks after the CRR move (expected) and Govt’s thrusts on transmitting the previous RBI rate cuts amid surge in liquidity along with Pharma stocks after Trump’s veiled threat to bring down the prices in US.

Watch 8225-8285 & 8195-8110 Zone In Nifty Fut (Dec), Which May Open Around 8205

As par early SGX indication, Nifty Fut (Dec) may open around 8205 (+68 points) following positive global cues amid another record closing of US stock Futs led by industrials & financial sectors. Although Pharma & biotech shares were under pressure due to Trump’s veiled threat to bring down the exorbitant drug prices there in US. Although, US bond yields & USD has dropped by some extent, Trump’s present style of functioning & tweets to resolve various issues, be it China or some rhetoric about investments in US by the companies may make the things different. As of now it seems that US may be the “best place in the world” for investments in 2017 onwards!!.

Yesterday’s US JOLT data was above estimates; but fall in bond yields has made the USD lower across the board, except GBP, which is under some pressure as UK PM has agreed for a definitive time line (March’17) to invoke the Article-50 and start the exit negotiations (subjected to SC verdict on the Brexit issue).

Globally, all eyes will be on the ECB today to have an idea of their future strategy.

Back to home, all eyes will be on the banks after yesterday’s RBI “shocker” to leave the rate unchanged. Although, return of CRR normalcy for the excess demonetized banking deposits may be apparently positive for the banks, in the long term it may be negative for them as well as for the INR (Indian bond yields may fall). Also Govt’s stance that banks should transmit the previous incomplete rate cuts on the back of surging liquidity may also put pressure on their NIM.

All eyes will be also on the ongoing political & scale of economic disruptions because of demonetization and progress of GST.

Technically, NF need to sustain above 8225 area for further rebound towards 8265/8285*-8325 & 8385*-8425 zone for the day (under mild to extreme bullish case scenario).

On the other side, sustaining below 8195 area, NF may further fall towards 8155-8110/8090* & 8040-7980* and further towards 7900*-7840 zone for the day (under mild to extreme bear case scenario).

Similarly, BNF (LTP: 18285) has sustain over 18450 area for further rebound towards 18550-18650* & 18750-18950* zone for the day (bull case scenario).

On the down side, sustaining below 18400 area, BNF may further fall towards 18350-18200* & 18100-17850* and 17600*-17530 zone for the day (bear case scenario).

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BNF