Nifty May Open & Trade On A Cautious Note Amid Negative Global Cues (“NO” Italy Referendum) And Ongoing Domestic Concerns Of Demonetization & GST/Parliament Logjam

Market Mantra: 05/12/2016 (08:30)

Watch 8175-8210 & 8040-7990 Zone In Nifty Fut (Dec), Which May Open Around 8095

As par early SGX indication, Nifty Fut (Dec) may open around 8095 (-15 points), almost flat following negative global cues after an expected “NO” vote in the overnight Italian constitution referendum, which may force the PM there to “officially” tender his resignation tomorrow/shortly. But in Austria, right wing party (Anti EU) suffered a defeat quite surprisingly and in New Zealand, their PM resigned quite surprisingly.

Though, there was no great turbulence in the “risk on” trade for the “expected” Italian referendum, all eyes will be on the EU market open in the afternoon. Resignation of Renzi may fuel significant political uncertainty not in Italy, but also in the whole EU universe, because “Anti EU” sentiment & Nationalism & Trade Protection may get momentum. In the short term, investors may also feel it quite risky to bail out the fragile Italian Banking system, specially Monte Parche. But, ECB may be also ready to flood the system with any required liquidity to avert a contaganion effect as always. 

Back to home, INR may also be under pressure as USD is gaining strength as a risk aversion and Friday’s NFP job numbers despite miss in wage growth.

Although, sudden “surgical strike” on the black money (demonetization) is quite debatable, there may be no doubt that after the “surgery”, “patients” (general public) are quite suffering as normal remonetization may take at least 3-6 months more.

GST may be also in the deadlock as there was no consensus over dual control mechanism in the GST council meet on Saturday and Govt may be also not so confident about April’17 rollout as time is running out (“Finger crossed”-FM).

Double whammy of demonetization & GST for the domestic market may be also aggravated by the sad news of cardiac arrest of TN supremo (“Amma”) and in case of more bad news (death), political uncertainty in the state may increase multifold and that may be another reason for further GST logjam, which will be negative for the market also.

Domestically, all eyes will be on the RBI day after tomorrow for the CRR & rate action, if any.

Technically, NF has to sustain over 8110 zone; otherwise it may further fall towards 8065/8040*-7990 & 7940-7890* area for the day (under bear case scenario).

On the other side, for any strength, NF need to sustain over 8140 area for further rebound towards 8175/8195-8210* & 8265/8285*-8330 zone for the day (under bullish case scenario).

Similarly, BNF (LTP: 18335) need to over 18200 zone; otherwise it may further fall towards 18100*-17950 & 17800*-17700 area for the day (bear case scenario).

For any rebound, BNF needs to stay above 18450 area for further up move towards 18575-18650* & 18850-19050* zone for the day (under bullish case scenario).

SGX-NF

 BNF