Nifty May Open Almost Flat Tracking Subdued Global Cues Amid Ongoing US Political Entertainment & Renewed NK Jitters; All Eyes Will Be On The Elusive 10k Level Today, But 10050 Zone May Be Vital From Here

Market Mantra: 25/07/2017 (09:00)

SGX-NF: 9970 (+9 points)

For the Day:

Key support for NF: 9960/9905-9860

Key resistance for NF: 9985/10005-10050

Key support for BNF: 24500-24700

Key resistance for BNF: 24200-24000

Hints for positional trade:

Time & Price action suggests that, NF has to sustain over 10005 area for further rally towards 10050-10115 & 10195-10250 in the short term (under bullish case scenario).

On the flip side, sustaining below 9985-9960 area, NF may fall towards 9905/9860-9820 & 9775- 9715 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24500 area for further rally towards 24700-24875 & 25050-25275 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24450 area, BNF may fall towards 24200-24000 & 23750-23500 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (July) may open around 9970, almost 9 points up tracking subdued global cues amid daily dose of ongoing US political entertainment and renewed NK-US political tensions as China is reportedly moving its military hardware to NK border and doing some fire drills also.

There was some speculation that to divert attention from his Russian connection issues, Trump may also launch limited missile attack on NK’s Nuke locations; all these geo-political issues has some effect on risk-on trade and USD is getting weaker, causing Yen & EUR some strength.

Overnight US market (DJ-30) also closed down (-0.31%) amid mixed earnings and ongoing political drama involving Trump & Co. The intensified US political tensions and testimony & investigations of Trump, his family members and close aides has raised some serious doubts about future of Trumponomics.

But, despite so much apprehensions, US stocks are practically non-stoppable and any Trump dips is being quickly bought because of hopes of a double digit earning (EPS) expansion, a dovish Fed & lower USD, which may be helpful for US exports/corporate earnings and imported inflation/reflation and above all, a robust inflow of funds, specially from bonds to stocks.

In that sense, tomorrow’s FOMC statement may be vital, as it may signal a definitive QE tapering intention by Fed from Sep’17, which may be also transformed into a global coordinated QT action; ECB may also follow soon and flow of easy money may be getting tough.

As global central banks (Fed/ECB/BOJ) are increasingly realizing that the 2% headline CPI target may remains elusive despite their best effort (QQE) and thus they may focus on other aspects of the economy, like employment, wage growth, consumer spending etc leaving the aspect of inflation at reasonable level for better & comfortable life of their citizens and normalize their incredible B/S gradually.

Today, one of Abe’s influential economic advisor also opined such rhetoric regarding the global standard of 2% inflation and central bank’s inability to catch that, which may be also some kind of QT signal from BOJ in the days ahead, if Fed indeed start its QE tapering from Sep’17 onwards.

Back to home, at Nifty 10k, valuations may be looking quite stretched at TTM PE of over 25.30, which is historically a bubble zone, whatever be the narratives; technically, Nifty now has to sustain over 10050 area for further bull rampage; otherwise bears may prevail in the days ahead; Nifty 10k mission may be complete for the time being; earnings has to match now!!

NF