Nifty May Be Range Bound Amid Positive Global Cues And Fiscal/LTCGT Worries & Mumbai Violence

Market Mantra: 03/01/2018 (09:00)

SGX-NF: 10490 (+18)

For the Day: updated: 14:15

For 03/01/2018: Jan-Fut

Key support for NF: 10460/10415-10360/10325

Key resistance for NF: 10555/10575-10610/10650

Key support for BNF: 25200/24950-24800/24500

Key resistance for BNF: 25650/25775-25875/26050

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10575 area for further rally towards 10610/10650-10695 & 10745-10795 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10555 area, NF may fall towards 10460/10415-10360/10325 & 10300/10285-10240 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25775 area for further rally towards 25875- 26050 & 26200-26325 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25725-25650 area, BNF may fall towards 25350/25200-24950 & 24800-24500 area in the near term (under bear case scenario).

Indian market (Nifty Fut-Jan/India-50) is now trading around 10490, edged up by almost 0.20% amid positive global cues and domestic worries about fiscal slippages, higher oil & LTCGT and some violence in Mumbai area on Bhiama-Koregaon/Dalit (caste) issues; Parliament proceedings is also being disrupted over the issue apart from normal life in Mumbai. Market may be also concerned about Q3FY18 earnings trajectory amid poor GST numbers in Nov and an overall economic slowdown for several reasons.

So far NF has made an opening session high of 10543 and day low of 10479 as market gradually returning to normal after X-Mas/New Year’s holidays.

Market may be also worried that to compensate the lower GST collections for the interest of the common man, Govt may ultimately levy some LTCGT or change the definition of the same from present 1 year to 2-3 years, both may be negative for the Indian stock market more or less. Govt may introduce LTCGT as “contribution for the growth of the country from the capital market”, which have so far little contribution directly.

Brent Oil may be another major headwind for the Indian economy & the market as it breaches the $65 level. Govt may roll back some additional ED/cess on petro products to cushion the impact on OMC & also the common man ahead of 2018-19 elections as it’s not in a position to hike the price right now; thus Govt revenue may be further affected, which will be negative for the fiscal math. Indian 10YGSEC bond yield continues to remain around 7.38% after making a high above 7.42% today.

India needs to grow in double digits for several years with modest population growth to improve its current poor GDP per capita comparable to its EM peers/China and generate enough quality employment & improved consumer spending.

But, stressed Indian corporates and ongoing NCLT resolution mechanism may be another headwinds for quality job creation & employment in India apart from protectionism stance from US; the new H1B visa rules may result in significant on site job losses for Indians in US and they may be sent back.

SGX-NF