Nifty May Open In Slight Negative Despite Positive Asian Cues Supported By Better Than Expected China GDP & Some Fall In USD As Yellen Sounds Like Dovish Yesterday Ahead Of “Trump Day”

Market Mantra: 20/01/2017 (08:30)

Watch 8435-8370 & 8485-8510 Zone In Nifty Fut (Jan), Which May Open Around 8421 Today

Market may also watch any EC action or final decision about budget presentation today, although as par some reports, 2^nd Feb budget day is “almost” a done deal.

As par early SGX indication, Nifty Fut (Jan) may open around 8421 (-17 points), almost flat despite positive Asian Cues supported by better than expected China GDP data, which flashed at 6.8% against estimate of 6.7% (prior: 6.7%). China retail sales data is also slightly better than expected, but IIP flashed a tad lower. China is supporting the morning Asian market “risk on” sentiment today by some extent.

USD fall across the G-10 universe despite better than expected US economic data (housing starts, jobless claims, PHY Fed index etc), published yesterday.

Apart from trading related long unwinding factor just before Trump taking charge of the Oval office, there are also some concerns about probable inaugural rhetoric of Trump & Co to “mark” China as a “currency manipulator” and other trade protection related measures. Although, talking China about its so called currency manipulation is nothing new, this time China being already under severe stress to defend its Yuan, may resort to more US TSY selling in order to “retaliate” Trump’s accusations, which may cause significant volatility in the FX world. 

Apart from Trump factor, yesterday’s tone of Yellen was surprisingly “dovish” and thus despite Draghi’s pledge of keeping a dovish monetary policy with no indication of any tapering, USD fall to some extent.

Basically, Fed may try to downplay the strength of US economy now, as USD has gained significant strength in the last few months, which may be above its comfort zone for the overall interest of the US economy. On the other side, ECB/BOJ/BOE are now more in comfort zone as their currencies has depreciated significantly in the last few months, which has also helped their macro economy to a great extent. Now it’s time for go reverse (under the unofficial central bank coordinated rotational monetary policy in order to help each other time to time??).

Back to home, all eyes may be on the EC today for any final decision of the budget day and more Q3 earnings after “Horror Result” from Axis Bank today.

Hints for actionable trading idea:

Technically, NF need to sustain above 8485-8510 zone for any further rally towards 8545*-8585 & 8645*-8685 zone for the day (under bullish case scenario).

On the flip side, sustaining below 8460-8435 area, NF may further fall towards 8370*-8305 & 8235*-8175 zone for the day (under bear case scenario).

Similarly, BNF (LTP: 19143) need to sustain over 19300 area for any further rally towards 19450-19550 zone for the day (under bullish case scenario).

On the flip side, sustaining below 19250 zone, BNF may further fall towards 19100-18950* & 18800*-18600 area for the day (under bear case scenario).

SGX-NF

BNF