Nifty May Open In Positive Following Mixed Global Cues Amid US Political Concern & Strength In Oil; Lack Of Simplicity Of GST & Mixed Q4 Report Cards May Also Cap Any Meaningful Rally From Here Until Nifty Sustained Above 9600 Area

Market Mantra: 22/05/2017 (08:30)

SGX-NF: 9480 (+24 points)

For the Day:

Key support for NF: 9435-9395/9375

Key resistance for NF: 9535-9560/9600

Key support for BNF: 22725-22590

Key resistance for BNF: 22900-23000

As par early SGX indication, Nifty Fut-I may open around 9480, gap up by 24 points following mixed global cues and GST & earnings optimism. Overnight, US market closed in positive (+0.69%) primarily on the strength in oil (energy related shares) & defence sectors (big deal with Saudi Arabia during Trump’s visit). Oil is trading higher around $51 after OPEC indication of not only production cut extension till March’18, but also for some deeper production cut. But, supply glut and talk of 6 months cut against present buzz of 9 months may also limit any blockbuster rally from here. For India, higher oil above $55-60 may pose serious concerns for overall economy (macro headwinds).

But, US political concern may take more serious turn in the days ahead after Comey confirmed about his testimony with the US congress and there was some reports that some more WH officials (close aide of Trump) may be involved with the alleged Russian interference. All these may invite an impeachment motion against Trump and as par some reports, US constitutional experts are exploring various probabilities & working hard for such unprecedented action in the recent US history.  As Trump is now on a 9 day tour in the ME & EU, US political drama may take ugly turn after his return next week.

Meanwhile, NK tested another long range ballistic missile early today; but as Trump is pre-occupied with his internal politics and blamed of being a “Russian Spy”, he may not be in a position to attack NK in the days ahead; thus market is calm so far.

Back to home, Indian market may also give more focus on the GST as 1^st July roll out day is now a reality as par the Govt/various stake holders. But, with many tax slabs, especially in the service sector and with so much rules & regulations, the present GST structure may be far from the original concept of “one tax one nation” and may be much more complex, than being a simple GST regime. Market may take more time to digest this GST.

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 area, NF may fall towards 9435-9395/9375 & 9320-9280/9240 area in the short term (under bear case scenario).

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

On the flip side, sustaining below 22950-22900 area, BNF may fall towards 22725-22590 & 22450-22300 area in the near term (under bear case scenario).