Nifty May Open Flat To Negative Amid Tepid Global Cues As Trump Failed To Pass The Medicare Legislation, Which May Undermine His Ability To Pass The Tax Cut Bills & Point To Increasing US Political Risks

Market Mantra: 27/03/2017 (08:30)

SGX-NF: 9090 (-21 points)

Key support for NF: 9100-9060 & 8995-8950

Key resistance for NF: 9150-9195 & 9235-9275

Key support for BNF: 21100-20950 & 20800-20700

Vital resistance for BNF: 21250-21350 & 21500-21675

As par early SGX indication, Nifty Fut (March) may open around 9090, almost flat, but recovered by around 32 points from the early Asian session low on the back of better than expected China industrial profits data (+31.5% YOY) and may be win of a regional election sea by Markel’s party in Germany. The global “risk off” trade follows some week end US political squabbling about failure of the passage (legislation) the US Affordable Medicare Bill.

On Friday night, US market actually recovered from the day low after Trump decided not to go for the vote as defeat was clearly written on the wall on the back of some of his own RNC dissidents because market was assuming that as the medicare chaos is now over, Trump administration may now focus on the main aspect of Trumponomics and may be able to pass the tax cuts bills. But, following some weekend political war of words between Trump & his oppositions, market may now be extremely cautious about passage of Trump’s idea about Tax cuts & incremental huge fiscal/infra spending. Also, there was some rumour of an impending resignation of Ryan, a key architect of Trumpcare and the tax cut proposals.

All these US political chaos has raised serious question over reflation/Trumpflation trade. Also, for the last few months, USD was getting stronger causing an opposite direction for the other major G-20 currencies like Yen, EUR which may have also helped their economy to a great extent (advantage of a depreciated currency). Thus now with USD going down, the global reflation trade may also be in doldrums.

Among all these ongoing global jitters, Indian market may also focus on the progress of GST, banking reform (NPA) and some specific stocks like RIL for all the wrong reason (apart from SEBI order of around Rs.1000-1300 cr fine with interests, R-Jio may also extend its Prime offer due to poor response as par some reports).

For RIL, 1265-1245 may be an important technical support and sustaining below that it may fall towards 1145 area in the near term.

Hints for actionable trading idea:

Time & Price action suggests that, Nifty Fut (March) has to sustain over 9175 area for further rally towards 9195/9215-9235-9275 area for the day/ in the short term (under bullish case scenario).

On the other side, sustaining below 9155-9135 area, NF may fall towards 9100-9060 & 9015/8995-8959 area for the day/ in the short term (under bear case scenario).

Similarly, BNF has to sustain over 21350 area for further rally towards 21500-2167 area for the day/ in the near term (under bullish case scenario).

On the other side, sustaining below 21300-21250 area, BNF may fall towards 21100-2095 zone for the day/ in the near term (under bear case scenario).