Technical & Macro Analysis Of Indian & Global Market----: Nifty Closed In Positive After A Late Day Recovery From Deep Loses Tracking Bounce In EU/Global Markets As A Hung Parliament For UK May Be An Excuse For Britain To Be Remain In UK

Nifty Finished The Eventful Week Marked By RBI & Various Global Events By Almost 0.15% Higher; What’s Next?

Apart from geo-political headwinds out of UK & US, domestic market may focus on CPI, GST & Fed next week; there may be more jitters out of UK & US political uncertainty in the days ahead.

Market Wrap: 09/06/2017 (17:00)

NSE-NF (June): 9681 (+11; +0.12%) (TTM PE: 24.48; Near 2 SD of 25; TTM EPS: 395; NS-9668)

NSE-BNF (June): 23691 (+95; +0.40%) (TTM PE: 29.80; Near 3 SD of 30; TTM EPS: 795; BNS-23691)

For 12/06/2017:

Key support for NF: 9670-9605/9530

Key resistance for NF: 9715-9750/9825

Key support for BNF: 23600-23300

Key resistance for BNF: 23750-23875

Time & Price action suggests that, Nifty Fut (May) has to sustain over 9750 area for further rally towards 9825-9865 & 9930-10050 in the short term (under bullish case scenario).

On flip side, sustaining below 9730-9715 area, NF may fall towards 9670-9630/9605 & 9565/9530-9490 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 23700 area for further rally towards 23875-24000 & 24100-24150 area in the near term (under bullish case scenario).

On the flip side, sustaining below 23650 area, BNF may fall towards 23450-23300 & 23050-22950/22750 area in the near term (under bear case scenario).

Nifty Fut (June) today closed around 9681, up by 0.12% after making a opening session low of 9620 and late day high of 9694. Indian market today opened almost flat almost flat following mixed global cues and surprised UK poll result which was indicating a hung parliament contrary to earlier opinion poll of a convincing victory for the Tories (Theresa May).

Overnight, US market closed almost flat from some earlier loses after Comey’s congressional testimony shows no major “gun fire”, which market does not know so far; but we may see more drama for this US political game of football, even if there is no serious threat of a Trump impeachment as of now. Some of the comments/observations made by Comey yesterday in the US senate may pave the way for more investigation on Trump for the allegation of obstruction of justice & Russian link; Trump administration may be under immense political pressure in the weeks ahead, which may affect its economic reform program (Trumponomics).

After the unexpected result from UK, risk trade may suffer in the short term; but the positive side may be the real Brexit will not happen at all. But still then, the resultant uncertainty may not be good for the overall global market sentiment. On the other side, if real Brexit happens, it may not be a soft Brexit at all for UK and the subsequent uncertainty may also adversely affected its economic prospect despite appeal of a devalued currency.

Today after initial sell off, Indian market recovered to some extent aided by short covering after positive opening of the EU market with no signs of panic; may be the market is now discounting the high probability of a “no Brexit” at all. Also, yesterday’s congressional testimony of Comey may have helped the risk-on sentiment today by some extent as there was no major fire power in the statement, which can initiate an immediate impeachment motion against Trump. But the ongoing war of words between Trump & Comey may pave the way for more political drama in the days ahead, which can turn into serious events for the market.

Nifty was today supported by private banks, especially HDFC (for favourable RBI policy of home loans), Maruti (weak JPY & stake hike buzz by the promoter group), metals (upbeat China trade data), Tata Motors (weak GBP may help JLR sales). Indusind Bank was in the limelight for the last few days as the bank is again raising some funds ($225 mln) to support its MSME & Micro finance lending portfolio.

Nifty was dragged by IT/TECHM/TCS (UK political uncertainty), & INFY (rumour of stake sale by the promoter group, but recovered later after denial), ITC (buzz of SUTTI stake sale by the Govt), cements (buzz of price cuts) and some PSBS (NPA woes and EQ dilution because of QIP/SBI).

Indian market may focus on the CPI data next week in order to gauze the probability of a Aug rate cut by RBI; Reuters consensus for CPI (May) is around 2.60% against April figure of 2.99%, helped by fall in food inflation.

Elsewhere, today’s star FX pair GBPUSD, which is now trading around 1.2722, need to stay over 1.26295 area; otherwise it may further fall towards 1.2515-1.23425 area in the coming days.

On the other side, for any bounce back, GBPUSD need to sustain over 1.27555 area for target of 1.2975-1.30495/55 area in the short term.

Despite optimism about “no Brexit” due to hung UK parliament, there may be enough uncertainty for the next few weeks and that may not be good for the GBPUSD; as Article-50 is already invoked, both UK & EU leaders may take some time to find some credible excuses for a “no real Brexit”; otherwise their own credibility may be at stake.

Meanwhile, USDJPY (110.80) is at rampage, may be due to tepid Comey testimony, appeal of a safe haven currency amid UK & EU political jitters and an upbeat forecast by Reuters poll (2 more US hikes in 2017).

Technically, USDJPY now need to break the zone of 110.90-111.60 for further rally towards 112.20-113.95 & 114.45 area in the short term.

On the other side, sustaining below 110.90, it may again fall towards 110.50-109.15 & 108.15 area by next week, if Fed disappoints the USD bull on the excuse of a UK & US political jitters.