Nifty May Open In Red Amid Subdued Global Cues & GST/Cigarettes (ITC) Squabbling By The Govt

Market Mantra: 18/07/2017 (09:00)

SGX-NF: 9910 (-24 points)

For the Day:

Key support for NF: 9890/9870-9760

Key resistance for NF: 9985-10005

Key support for BNF: 23900-23700

Key resistance for BNF: 24125-24250

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 9985-9955 area, NF may fall towards 9890/9870-9790/9760 & 9715-9670 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24125 area for further rally towards 24250-24350 & 24450-24600 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24075 area, BNF may fall towards 23900-23700 & 23600-23450 area in the near term (under bear case scenario).

As par early SGX-indication, Nifty Fut (July) may open around 9910, almost 24 points gap down tracking subdued global cues after US healthcare bill got further delayed and EUR got strength ahead of ECB meet day after tomorrow.

Overnight, US market (DJ-30) also closed almost flat (-0.04%) on mixed earnings and lack of any meaningful cues; but some gains in utilities & consumer stocks were substituted by declined in healthcare.

Indian market sentiment may be also affected today by Govt’s flip flops on effective GST rate on Cigarettes. Although, the previous optimism over favourable GST rate or the present pessimism about extra cess may be both overdone as for the addicted smokers, price of Cigarette one rupee more or less does not mean anything.

My personal channel check with a nearby small Cigarette shop in the immediate period of post-GST found that the products were in acute short supply and were also selling at premiums to the MRP both by the distributor or retailer and smokers were not caring it at all!! 

The disturbing trend is that although, there is some concern among aged smokers to leave it, younger generations, even teenage girls are increasing being addicted to it; in that sense, absolute volume may have no significant relationship with small increase or decrease in prices(MRP); most of the Cigarettes are being sold in one/two sticks in lieu of a whole packet.

But, this whole flip flops over Cigarettes GST rate may be also indicating that Govt is not ready to sacrifice any revenue even for a fair rebalancing of GST rates among various products & services, even it calls for an extreme multiplication of rates. 

SGX-NF