Nifty May Open In Positive As Dow Trading “Convincingly” Above 20k; But Trump Rhetoric Of 20% Duty On All US Imports (Including IT Outsourcing Service?) And Talk Of “Fiscally Loose” Budget May Limit The Gain

Market Mantra: 27/01/2017 (08:30)

Watch 8675-8595 & 8705-8785 Zone In Nifty Fut (Jan), Which May Open Around 8670 Today

As par early SGX indication, Nifty Fut (Feb) may open around 8670 (+57 points) amid positive global cues in a holiday thinned Asian market. Day before yesterday, Dow achieved the much awaited 20k level and still now trading convincingly above that as Trump’s various executive decisions and talks are sounding more than just rhetoric and may be itself acting as “stimulus”. Also, upbeat Q4FY16 earnings for most of the US Companies reported so far has aided the rally. Apart from “Trump Trade” and good US earnings, the US & also most of the major global markets are rallying quite relentlessly as overall global growth, PMI, CPI may be indicating an upward thrust in the last few months despite concerns of various geo-political headwinds.

Yesterday’s overall US economic data was mixed and home sales & jobless data was slightly below market estimates. Higher borrowing costs for US mortgage rate may be taking its toll for the US housing market there.

After some fall in the last few days, USD is getting some bids as BOJ reaffirmed its commitment to keep extending bond buying in order to control the JGY yields. Also, Trump’s plan to apply 20% tax on all US imports (including service??) after yesterday’s Mexico wall building plan drama may initiate an all out “global trade war” with US.

If Trump is indeed planning to apply such 20% import tax on services also part from goods, Indian IT companies may be in some doldrums

Apart from ongoing Trump Tantrum, globally all eyes may be on the US GDP today.

Back to home, after significant Pre-Budget rally on the hopes for a “dream budget” this year, market may choose some profit booking ahead of the event on 1^st Feb next week. As par some reports, Govt may be fiscally loose and let the fiscal deficit to be targeted in a range of 3.5-3% instead of the earlier projection of 3% in FY-18. 

A higher fiscal deficit may translate into higher borrowings by the Govt and banks may not be able to transmit lower rates to the economy. Also, a higher fiscal deficit may be negative for rating action due to higher Govt debt/GDP ratio.

Hints for actionable trading ideas:

Technically, NF needs to sustain over 8705-8725* area for further rally towards 8760/8785-8835 zone for the day (under bullish case scenario).

On the other side, sustaining below 8675*-8655 zone, NF may fall towards 8595/8565*-8480/8455 area for the day (under bear case scenario).

Similarly, BNF (LTP: 19509) need to sustain above 19750 zone for further rally towards 19900-2000* zone for the day (under bullish case scenario).

On the other side, sustaining below 19650*-19550 area, BNF may fall towards 19350*-19100 zone for the day (under bear case scenario).

SGX-NF

 BNF