Nifty May Close Almost Flat On Earnings Optimism & Concern Of A Populist Budget & LTCGT

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

SGX-NF: 10650 (+24)

For the Day: updated: 02:45

For 09/01/2018: Jan-Fut

Key support for NF: 10590/10540-10480/10415

Key resistance for NF: 10700/10775-10815/10860

Key support for BNF: 25675/25500-25300/25200

Key resistance for BNF: 25800/25900-26100/26250

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10700 area for further rally towards 10750/10775- 10815/10860 & 10955-11095 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10675-10655 area, NF may fall towards 10590/10540-10480/10415 & 10350-10200 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25900 area for further rally towards 26100-26250 & 26325-26615 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25850-25800 area, BNF may fall towards 25500-25300/25200 & 25000-24800 area in the near term (under bear case scenario).

Indian market (Nifty Fut-Jan/India-50) is now trading around 10625, edged down by almost 0.05% amid positive globalcues and optimism about earnings & concern for a populist budget ahead of elections and fiscal slippages thereof. As par reports, Govt may cut income tax or provide some additional deduction for lower & middle income category and emphasize on free health care to woo middle class ahead of elections.

Govt may also slash GST rates further on certain products & services and may also simplify the return filling process for the same.

But Govt may also bring Long Term Capital Gain Tax (LTCGT) in FY-19 budget selectively above Rs.5 lakh long term capital gain @10% so that majority of the small investors (middle class) do not have to pay any LTCGT, but institutions/HNI (around 5000 in numbers) has to pay such LTCGT.

At the same time, Govt may also encourage MF investment for the middle class and provide some tax sops on it.

Although, Govt/ policy makers are hopeful that targeted fiscal deficit of 3.2% for FY-18 will be not breached, market is not so much optimistic; Indian 10YGSEC bond yield is now hovering around 7.37%, a level comparable to Greece few years ago and equity market is bound to react on such high borrowing costs for the economy & corporates in the coming days despite global Goldilocks euphoria.

SGX-NF

SPX-500