Nifty May Open Almost Flat Amid Mixed Global Cues (Optimistic Fed & Pessimistic China PMI); All Eyes May Be On The Govt’s Official Announcement For A NPA Policy, Indian Service PMI Data & Ongoing Q4 Report Cards

Watch 270-260 & 282-292 As Vital Range For ICICI Bank After Worsening Asset Quality But Better Than Expected NII/PAT

Market Mantra: 04/05/2017 (08:30)

SGX-NF: 9345 (+8 points)

For the Day:

Key support for NF: 9295-9235

Key resistance for NF: 9405-9475            

Key support for BNF: 22200-22000

Key resistance for BNF: 22525-22675

As par early SGX indication, Nifty Fut-I may open around 9345, almost flat following mixed global cues. Overnight US market closed almost unchanged after some optimistic statement (slightly hawkish) from Fed yesterday. Although, overall Fed did not give any strong indication about its likely move (hike or hold) in June, it undermines soft US economic data in Q1 (job/consumer spending/inflation) and brushed aside it as purely transitory. Thus, market is assuming it as a strong signal for a June rate hike and subsequently FFR is now around 92% from 69% yesterday before Fed. USD/US bond yields are getting bids across the board and USDJPY is hovering around 113; thus risk mode is “on”.

In the morning Asian session, Japan is also trading in green as JPY got weakened, but China market is under some pressure after tepid/ below expected Service PMI data, which is flashed as 51.5 (Apr) against estimate of 52.6 (prior: 52.6).

Back to home, all eyes may be also on the Indian service PMI data for Apr (prior: 51.5) and specially on any official announcement from the Govt for the NPA policy (banking amendment rule), where RBI may be more empowered to tackle or take action against defaulters to create pressure for recovery or an effective resolution. Some more NPA policy may also be announced.

Market/PSBS may be quite upbeat today as a follow up for this NPA policy; but at a glance, sending defaulters to jail or creating pressure on them do not simply solve the NPA mess instantly; defaulters/stressed companies are already in severe pressure either to pay back or bring their project in line (viable); the underlying structural problem need to be solved properly.

  

Hints for actionable trading ideas for NF & BNF:

Time & Price action suggests that, Nifty Fut (May) has to sustain over 9425 area for further rally towards 9475-9510 & 9550-9600 in the short term (under bullish case scenario).

On flip side, sustaining below 9405-9385 area, NF may fall towards 9320/9295-9235 & 9175-9115 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 22525 area for further rally towards 22675-22800 & 23000-23200 area in the near term (under bullish case scenario).

On the flip side, sustaining below 22475 area, BNF may fall towards 22275-22200 & 22100-21950 area in the near term (under bear case scenario).

SGX-NF