*Market Wrap: 19/12/2016 (21:00)*
*Technically Nifty Fut (Dec @8127) has to sustain over 8165-8205 area
for further rally towards 8345-8395 & 8435-8485 zone in the near term.*
*On the other side, sustaining below 8090-8040 zone, NF may further fall
towards 7980-7900 & 7840-7645 area in the short term.*
Nifty Fut (Dec) today closed around 8127 (-19 points), almost flat
(-0.24%) after making a session high of 8149 and late day low of 8113 in
a lacklustre day of trading marked by holiday thinned low volumes and
tepid global cues.
Indian market today opened in a negative note and drifted further lower
amid pressure on China market (-0.5%) and renewed concerns on Monte
Paschi bailout efforts. China market was under pressure may be because
of the “currency curbs” (USD) to stem Yuan’s growing weakness (outflow
concerns). Along with the “outflow control” by PBOC, upbeat housing
price data and its return of the “seized” US drone has helped some drops
in USDCNY.
EU market was also under pressure after scramble in Monte Paschi Shares
sale and the disgruntled Italian bank was down by nearly 8% in the noon
trade; although it’s now almost certain that if the bank is unable to
find any suitable investors for its planned share sales, then Italian
Govt will bail it out eventually by this month, as ECB time is running
out fast.
In tomorrow’s BOJ meet, Kuroda is expected to stay pat after huge
devaluation of around 11% for the Yen in the last few weeks, since 8^th
Nov, after Trump’s victory speech. All focus will be on the Kuroda’s
presser and Q&A to have an idea about BOJ’s thinking for 2017 after
recent upbeat Japanese economic data and exports on the back of a
depreciated currency (Yen).
BOJ may be less “dovish” in 2017 and may also hints for any tightening
(rate hike to zero from negative) in order to steepen the JGY yield
curve and to keep policy parity with Fed, which is also on the hawkish
path and concern may be on Chinese Yuan devaluation. Incidentally, due
to negative bond yields, Japanese banks fixed income (bond) portfolio is
under huge MTM loss, which may be also hampering their lending capacity
for the real economy, affecting domestic economy.
Thus in 2017, hawkish Fed and less dovish BOJ, ECB and also PBOC may
ensure that era of “easy money” policy may be over and as the arsenal of
the central bankers may be fully saturated now, they will likely to
reverse some of their QQE in order to preserve it for “rainy day” and EM
currency & financial market, including India may also be under
significance pressure.
Back to home, Indian market was also very jittery amid ongoing
demonetization chaos and ever changing rules for currency exchange
almost every other day. It seems that Govt is really in some types of
confusion as nearly 14 lakh cr of the old currency has already deposited
with the bank. Now, the big question is how much will be able to return
to the public after so much planned regulatory hurdles and IT lens. The
more time it will take for “redistribution”, India’s consumption story
may be affected more.
Today all eyes were also on NAMO’s speech in UP for any stimulus
designed for the “Aam Admi”; but there was nothing except some
indication for more times beyond the 50 days to bear the “short term
pain” for “long term gain”.
All eyes will be now on the 2^nd Jan’17 public meeting ofNAMO for any
Indian version of “Helicopter Money” (fiscal stimulus) and an imminent
announcements for UP poll dates, probably in early March (may be
announced officially soon after 31^st Dec’16). Polls of the other 4
states may also be advanced to take care of the present demonetization
led “public support” and stance of “war against black money/corruption”.
<https://4.bp.blogspot.com/-cePT9sLSRKo/WFgaJqeAbTI/AAAAAAAAJ3A/y1y2UhWqJdcy2gzUG1HYgaivklTSTRSRwCLcB/s1600/SGX-NF-PATTERN-SHORT%2BTERM-19-12-2016.png>
SGX-NF
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Thanks & Regards,
Asis Ghosh
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