Nifty May Open In Positive Tone Amid Mixed Global Cues Ahead Of Fed & Early Recovery Of Oil After Surprised Drawdown In API Report

Market Mantra: 15/03/2017 (08:30)

SGX-NF: 9125 (+27)

Watch 9155-9075 & 9195-9275 Zone In Nifty Fut (March)

As par early SGX indication, Nifty Fut (March) may open around 9125 (+27 points), following mixed global cues ahead of Fed. Overnight US market was weak (-0.21%) on the back of fall in oil (energy shares) as there was some Saudi confusion of OPEC production cut & storage issue and bearish comment by the Kuwaiti oil minister (oil is heading to $45). But after better API report (surprised drawdown of crude oil), Crude oil recovered from its support area of $47 and now trading around 48.50, which may be causing some “risk on” sentiment globally. Technically, Crude Oil has to sustain at least above 50 for any further strength.

Apart from Fed, all eyes may be on the outcome of Dutch election to see the fate of ultra right (anti EU) nationalistic candidate. Also, development of Brexit may be closely watched after UK Parliament has gave its nod to invoke A-50. Although A-50 is supposed to be invoked by March’17, as par latest report, ECB may not permit to officially start the Brexit negotiation process before Jun’17.

Market may also keenly watch BOJ, SNB & G-20 meet tomorrow. Fed is widely believed to be in “hawkish hike” mode today; i.e. they may hike 0.25% with guidance of further 2-3 hikes in every quarter end in 2017.

Considering various circumstances & strength of recent US economic data except wage growth and Trump’s current rhetoric of a weaker USD & actual trajectory of “Trumponomics”, there may be four Fed scenarios today:

1.    Hawkish Hike : USD will further rally; negative for EM & India

2.    Dovish Hike: USD will fall to some extent; slight negative for EM & India

3.    Hawkish Hold: USD will fall moderately; neutral to positive for EM & India

4.    Dovish Hold: USD will fall good; positive for EM & India

But, considering overall trajectory of Indian CPI data & core inflation, which is hovering around 5% and limitations of further rate cut transmissions by the banks due to high small savings rate in India, RBI may be in neutral (owlish) mode, if not hawkish in FY-18; there may not be any further rate cut by RBI in the foreseeable future irrespective of Fed action.

Moreover, farm loan waiver issue in UP may have some spiraling effect on other states also and may also be negative for the banks/state/central budgets.

Hints for actionable trading idea:

Time & Price action suggests that, Nifty Fut (March) has to sustain over 9155 area for further rally towards 9195-9235 & 9275-9350 for the day/in the short term (under bullish case scenario).

On the other side, sustaining below 9135 zone, NF may fall towards 9075-9035 & 8985-8915 area for the day/ in the short term (under bear case scenario).

Similarly, BNF (LTP: 21132) has to sustain over 21350 area for further rally towards 21500-21675 & 21855-22050 area for the day/ in the near term (under bullish case scenario).

On the other side, sustaining below 21300 area, BNF may fall towards 21150-21000 & 20900-20700 zone for the day/ in the near term (under bear case scenario).

 SGX-NF