Nifty May Open Gap Up Amid Mixed Global Cues And Lower Trajectory Of Inflation & Hopes Of An Early Monsoon; But Mixed Earnings & NPA Divergence Issue May Also Cap Any Blockbuster Rally

Idea (LTP: 92): Sustaining above 93-95 zone; may again rally towards 103-111 &120 area; watch 87-84 & 81 as nearest positional support after better than expected Q4FY17 result; although suffered deep loss courtesy R-Jio.

Market Mantra: 15/05/2017 (08:30)

SGX-NF: 9450 (+35 points)

For the Day:

Key support for NF: 9415/9380-9340

Key resistance for NF: 9485-9515/9550  

Key support for BNF: 22600-22500

Key resistance for BNF: 22775-22875

As par early SGX indication, Nifty Fut-I may open around 9450, almost 35 points gap up following lower CPI/WPI and prospect of a better & early monsoon (3-5 days in advance). But, tepid IIP data, NPA divergence issue & overall mixed Q4FY17 earnings so far may also limit any block buster rally of the domestic market today.

Overnight US market also closed in almost flat, but off the lows after terrible inflation (core CPI) & core retail sales data; but supported by upbeat oil amid chatter of OPEC production cut extension for another 6-9 months (till CY-17). Overall, despite soft US economic data, it seems that Fed is determined to hike rate in June’17 and that’s coupled with divergent monetary policy of other G3 central banks (BOJ/ECB) is helping the USD & risk on trade to some extent. But, some hawkish comment about ECB QE is now also helping the EUR.

In the weekend, NK again tested a long range ballistic missile, which is being suspected as a type of ICBM, capable of hitting the US coast. Although the market is calm so far, we need to watch Trump’s reaction later in the day for any sudden “surgical strike” on NK by US in the coming days.

The ongoing cyber attack & its implications all over the globe & also on India may also need to be watched for any serious disruptions or not.

Back to home, there will be earnings deluge this week with some prominent blue chips and market will also watch it keenly along with any definitive NPA resolution policy by RBI and further progress & clarity on GST. Market is expecting a CAGR of 20-25% for Nifty EPS for FY-18 against previous trend of around 7% CAGR in the last few years.

Hints for actionable trading ideas for NF & BNF:

Time & Price action suggests that, Nifty Fut (May) has to sustain over 9485 area for further rally towards 9515-9550 & 9600-9680 in the short term (under bullish case scenario).

On flip side, sustaining below 9465-9425 area, NF may fall towards 9415/9380-9340 & 9295-9245 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 22775 area for further rally towards 22875-23000* & 23075-23200 area in the near term (under bullish case scenario).

On the flip side, sustaining below 22725-22600 area, BNF may fall towards 22500-22300 & 22050-21950 area in the near term (under bear case scenario).

 SGX-NF