Nifty May Open In Positive Tone As GST May Be A Reality By July’17; But Some Bounce Back In USD & Hawkish Talks Of ECB/BOE & Tightening By PBOC After Fed Hike May Also Dampen The Sentiment later on

Market Mantra: 17/03/2017 (08:30)

SGX-NF: 9200 (+28 points)

Watch 9215-9145 & 9235-9275 Zone In Nifty Fut (March)

As par early SGX indication, Nifty Fut (March) may open slightly gap-up around 8200 (+28 points), apparently on optimism for GST implementation from 1^st July’17 after yesterday’s GST meet. Although, there will be another final (?) GST meet on 31^st March before sending the bill to the Parliament and respective states, it seems that GST will be not “final” before April-May’17 and in that scenario, pan India roll out from July or even by Sep’17 may looks really difficult, considering time constraint and lack of preparedness on the part of traders community/SMES.

After Fed’s “dovish hike”, although yesterday BOJ/SNB/BOE all came pat as expected, some officials of BOE & ECB area sounding like hawkish and have talked about increasing rates or moving from ZRIP/NRIP deposit rates amid improving inflation and economic outlook. BOJ is still maintaining its dovish/neutral stance considering Japan’s tepid core inflation rate. PBOC, on the other hand has increased marginally its reverse repo rate/OMO/MLF/SLF and subsequently Chinese banks has hiked some lending rate for the real estate sector, which may be under some bubble zone to cool it.

Considering all the aspects of inflation/growth dynamics in India, a hawkish Fed & increasing US rate, higher inflation trajectory, specially core inflation in India, probability of a deficient monsoon this year due to El Nino Effect and above all limited transmission scope for further rate cuts by the banks, RBI may also be on neutral/hawkish stance in FY-17 and may not cut at all, but may talk about rate hike in FY-18 to keep real interest rate differential with Fed.

Hints for actionable trading idea:

Time & Price action suggests that, Nifty Fut (March) has to sustain over 9235 area for further rally towards 9275-9350 & 9425-9550 for the day/in the short term (under bullish case scenario).

On the other side, sustaining below 9215-9195 zone, NF may fall towards 9145-9075 & 9035-8975 area for the day/ in the short term (under bear case scenario).

Similarly, BNF has to sustain over 21400 area for further rally towards 21500-21675 & 21855-21950 area for the day/ in the near term (under bullish case scenario).

On the other side, sustaining below 21350 area, BNF may fall towards 21200-21100 & 21000-20900 zone for the day/ in the near term (under bear case scenario).

 SGX-NF