Nifty May Open In Upbeat Mood Amid “Slide” In USD/US Bond Yields After “Dovish Hike” By Fed; But NF 9235-9275 May Be A Big Hurdle As “Dips” In USD May Be Temporary Simply Because Of Divergent Monetary Policy Between Fed & Other Major Central Bankers

Market Mantra: 16/03/2017 (08:30)

SGX-NF: 9175 (+70 points)

Watch 9195-9075 & 9235-9275 Zone In Nifty Fut (March)

Overall, after creating so much buzz or hawkish scripts about incremental US rate hike in 2017, Fed ultimately delivered somewhat less hawkish than expected or a “dovish hike” yesterday with a guidance for further 2 hikes in 2017, most probably in Sep & Dec’17. Markets/USD bulls were expecting total 4 hikes in 2017 at each & every quarter with some intention/guidance about shrinking of Fed’s huge balance sheet size of $4.5 tln. Yellen is not so confident about strength of US economy to withstand such shrinkage of Fed’s balance sheet, but confident enough to bring the US rate at normal level; i.e. 1% above US headline CPI or at least core CPI, which translates a Fed rate of 3-3.75% by 2018-19 from present 1%.

A 3% Fed rate by 2018-19 may translate around 8 hikes of 0.25% and in that scenario, Fed may at least hike by another 5-6 times in 2017-18. USD is bound to recover after initial whipsaws simply because other central banks (BOJ/ECB) are not considering any hike, at least officially now.

Another 2 hikes may be normal for US economy, but it may not be good for EM & Indian market; China today responded by hiking its OMO/MSF reverse repo rate.

As par early SGX indication, Nifty Fut (March) may open gap up, around 9175 (+70 points), following upbeat global cues, except Japan as USD fall to some extent after Fed/Yellen sounds dovish or rather less hawkish than expected by the market.

Apart from Fed, Indian market may also look into today’s GST meet to assess the real probability of a July-Sep’17 roll out.

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 for the day/in the short term (under bullish case scenario).

On the other side, sustaining below 9195 zone, NF may fall towards 9155-9115 & 9075-9015/8995 area for the day/ in the short term (under bear case scenario).

Similarly, BNF (LTP: 21215) 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 21080-20980/900 & 20815-20635 zone for the day/ in the near term (under bear case scenario).

SGX-NF