-------- Forwarded Message --------
Subject: Nifty Settles Almost Flat (-0.28%) Amid Brexit Fears &
Pessimistic/Cautious Fed
Date: Thu, 23 Jun 2016 06:17:26 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
Nifty Fut (June) closed around 8202 after making a low of 8154 and high
of 8253 today.
*Technically, NF has to sustain above 8280-8295 for target of 8335-8350
& 8410-8510 in the near term (in the event of Bremain)*
*
*
*On the downside, sustain below 8180-8140, NF will target 8110-8060 &
7995-7860 and 7780-7695 by the next few trading sessions (in the event
of Brexit).*
Although, most of the polls in UK indicating "Bremain" by over 6%
majority, this is may not be a foregone conclusion. Yesterday, there was
some "big" TV debate in Wembley Stadium (UK) and majority of the
audience mood was in favour of "Brexit".
Market is quite confident that "Remain" vote will outnumber "Leave" as
majority of the undecided voters and even the current "Brexit"
supporters will vote for stability ("Bremain") on the D-Day.
Still there is some element of uncertainty in this "Brexit" drama and
market does not like such "uncertainty". Now, as on day, the price
action suggests that market may have already discounted the "Bremain"
scenario by a great extent and we may see only 3-5% rally across the
risk assets classes.
On the other side, in the terrible scenario of "Brexit", market may sold
off by around 10-20% over the next few days as it is not priced in or
prepared for that scenario. As par various reports, FTSE can fall by
around 20%, Stoxx-500 by around 25%, S&P by around 10% in the "dooms
day" scenario of "Brexit", similar to 2008 Lehman Brothers shock.
We personally feel that "Brexit" will not happen and after "Bremain", we
may see some relief rally across various "risk" & commodity assets; but
precious metals may fall and Gold may dip to 1200-1180 level as appeal
of "hard assets" will loose to some extent after this "Brexit" anxiety
is over.
Yesterday's Yellen testimony/script has nothing new, but Fed is clearly
concerned about US growth and "Brexit" event. Market now looking for US
growth & confidence Fed rather than any rate pause action by Yellen.
After all, there is no visible growth in G-3 universe (US/EU/Japan)
despite so much QQE over the last decade or so and more over, its the
"easy helicopter money" which may be responsible for the present
mismatch in supply demand dynamics of certain commodities like oil,steel
and may cause next wave of crisis until there is a significant
re-balancing. If the major central bankers will indulge in continuation
of such "helicopter money", productions & supplies of various
commodities will be increased, while there may not be any significant
increase in the corresponding demand without any structural reform. This
will cause a significant credit defaults and banking crisis.
Apart from the global issues, our market was under some pressure today
as Subaramanian Swamy strikes again and this time against CEA Arvind
Subramanian, accusing him as an "American Agent" too !!.
Though market was relieved to some extent after FM stated that BJP/Govt
is not sharing the comments of SS and its his personal view. But, again
this was the same case with "Rexit" and clearly SS could not make this
adverse comment about an important Govt policy maker and eminent
economist like AS without active/passive support of top leaders of BJP/RSS.
Thus, if SS continues his attack on AS like he did on Rajan, it may also
be very difficult for AS to "stay in India" too !! There are also some
market reports that SS may be the chosen as the next RBI Gov or FM and
that's why the internal politics of BJP/RSS is playing this game of
football. If this happens, then it may be a big negative for our market,
at least in the short term.
Announcement of the name of next RBI Gov (Urjit Patel/Arundhati
Bhattacharya/Subramanian Swamy) before monsoon session of Parliament,
passage of GST, full implementation of 7PC & its liquidity oriented
consumption demand, visibility of continuous economic recovery, success
of telecom auction. PSBS mergers and NPA recovery may be some of the
triggers for our market in the coming days.
Today, there was some report from UNCTAD that FDI to India may cross $60
bln on the back of favourable policy environments and fresh green field
projects in manufacturing sector.
Notably, today Govt/cabinet cleared the textile policy to boost the
sector, but the textile companies retraced to some extent as it was
already priced in yesterday itself and this may be another example of
"Buy the rumour and sell the news".
Tata motors also fall by around 2.50% as "Brexit" may cause havoc loses
for JLR. Similarly Infy, TCS dropped on "Brexit" related global demand
for IT services fear.
<https://4.bp.blogspot.com/-ZRfyQunK1Ic/V2rKJ4pSgCI/AAAAAAAAHkg/RcqMWiCMmTcQ66e_6U-YkXh4SK2Sb4EngCLcB/s1600/NF-FIBB-22-06-2016.png>
--
Thanks & Regards,
Asis Ghosh
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