Nifty May Open In Red Amid Subdued Global Cues (Plunge In Oil & USD); China’s Inclusion In MSCI Index May Be Slightly Negative For India (Fund Outflow Concern)

Market Mantra: 21/06/2017 (08:30)

SGX-NF: 9635 (-41 points)

For the Day:

Key support for NF: 9615-9580/9530

Key resistance for NF: 9675/9725-9775

Key support for BNF: 23650-23450/23300

Key resistance for BNF: 23875-24000

Time & Price action suggests that, NF has to sustain over 9725 area for further rally towards 9775-9825 & 9865-9950/10050 in the short term (under bullish case scenario).

On flip side, sustaining below 9705-9675 area, NF may fall towards 9655/9615-9580 & 9530/9505-9470 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 23875 area for further rally towards 24000-24115 & 24250-24435 area in the near term (under bullish case scenario).

On the flip side, sustaining below 23825-23750 area, BNF may fall towards 23650-23450 & 23300-23100 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (June) may open around 9635, almost 42 points down tracking subdued global cues. Overnight, US market/DJ-30 also closed lower (-0.29%) amid selling in energy & retail shares following plunge in oil for ongoing concern of supply glut and concern for Amazon’s aggressive marketing & inorganic growth strategy (deflation).

After nearly three years of squabbling, MSCI today announced to include China-A shares into its EM index; as par reports, initial inflow may be around $18 bln; but if China can reform its stock market as par global standard, net inflow may be around $350-400 bln over next few years; it may take as high as 5-10 years for full inclusion of China-A shares into MSCI EM index (0.73% weightage).

As a result of China’s inclusion in MSCI index, all the concerned EM may see some rebalancing of funds and India may also see some outflow; total FPIS investment in India now may be around $350 bln including bond market, which is equivalent to the country’s FX reserve of around $375 bln.

Indian market may also focus on IBC/NPA resolution effectiveness and issues of GST disruptions amid poor IT infrastructure and preparedness among the stakeholders. The present format of GST may be termed as a modified version of VAT (old wine in new bottle) and may not be the ideal & simple concept of “one tax one nation”, originally designed.

SGX-NF