Nifty May Open Gap Up Following Positive US Market/Mixed Global Cues; Domestic Market May Focus On NPA Ordinance Details/RBI & GST Effect

Market Mantra: 23/05/2017 (08:30)

SGX-NF: 9480 (+25 points)

For the Day:

Key support for NF: 9420-9395/9375

Key resistance for NF: 9500-9535/9600

Key support for BNF: 22590-22450

Key resistance for BNF: 22800-22900/23000

As par early SGX indication, Nifty Fut-I may open around 9480, up by 25 points following positive/mixed global cues. Overnight US market closed in positive (+0.43%) following Trump’s “successful” overseas tour, which saw billions of dollars in defence contract procurement for the various US companies with Saudi Arabia (Trump really means business !!). Apart from defence & industrials, US market was also supported by energy shares amid growing optimism about the OPEC production cut extension for another 9 months with some deeper production cuts (?).

But global market risk-on sentiment suffered some set back after a horror terrorist attack in the London-Manchester concert later in the day. As a result, USDJPY & risk-trade was subdued in the morning Asian session. Strength in Yen is causing some pressure on the Japanese market; but optimism of China’s A-500 index inclusion probability in the MSCI index may be supporting the China market sentiment right now.

Among all these global events, Indian market may open in green on GST & NPA policy optimism and mixed earnings trend so far. Market may focus more on the fine prints of NPA ordinance/latest RBI directives and effect of GST on the economy & industry/business. As par some analysts/rating agency, working capital cycle of Indian Inc/business may be affected for the first few months as a result of GST disruption/procedural issues.

Hints for actionable trading ideas for NF & BNF:

Time & Price action suggests that, Nifty Fut (May) has to sustain over 9535-9560 area for further rally towards 9600-9640 & 9680-9770 in the short term (under bullish case scenario).

On flip side, sustaining below 9515-9470 area, NF may fall towards 9420-9395/9375 & 9320-9280/9240 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 22900 area for further rally towards 23000/23075-23200 & 23325-23450 area in the near term (under bullish case scenario).

On the flip side, sustaining below 22850-22750 area, BNF may fall towards 22650-22590 & 22450-22300 area in the near term (under bear case scenario).