*Market Wrap: 15/03/2017 (18:00)*
*NSE-NF: 9105 (+2 points; +0.02%)*
*NSE-BNF: 21215 (+68 points; +0.32%)*
*Time & Price action suggests that, Nifty Fut (March) has to sustain
over 9155 area for further rally towards 9195-9235 & 9275-9350 in the
short term (under bullish case scenario).*
*On the other side, sustaining below 9135 zone, NF may fall towards
9075-9035 & 8985-8950/15 and 8865-8790 area in the short term (under
bear case scenario).*
*Similarly, BNF (LTP: 21215) has to sustain over 21350 area for further
rally towards 21500-21675 & 21855-22050 area in the near term (under
bullish case scenario).*
*On the other side, sustaining below 21300 area, BNF may fall towards
21080-20980/900 & 20815-20635 zone in the near term (under bear case
scenario).*
Nifty Fut (March) today closed around 9105, almost flat after making a
session high of 9130 and low of 9101 in an extremely range bound day of
trading in absence of any major trigger ahead of Fed today & BOJ/SNB
tomorrow with an outcome of Dutch election. Domestic market basically
consolidated today after big move of yesterday following better than
expected margin of win for BJP in the state elections, especially in UP.
As probable Fed hike by 0.25% is almost discounted by the market, focus
will be on Fed’s statement/dot-plots and Yellen’s Q&A/Presser to gauze
Fed’s appetite for further rate hikes in 2017; will it be 3 or 4 times
and gradual unwinding of Fed’s huge balance sheet of around $4.5 tln in
2017 ?
EM & Indian market has not reacted too much for a high probable Fed rate
hike in March, if Fed indeed hikes today with a hawkish bias for
multiple rate hikes in 2017 (almost every quarter end totaling 4 or 3
hikes), then it will be the 1^st time after 2008 economic crisis, Fed is
hiking on two consecutive quarters, last being on Dec’16. Recent Fed
hike history suggests that after the hike, global & EM/Indian market has
corrected significantly, be it only for a stronger USD/US bond yields or
along with some other reasons (China jitters/Yuan devaluation &
capitulation in oil after Dec’15 and ‘Trumpism” after Dec’16). Thus, a
“hawkish hike” by Fed today may not be good for EM & Indian market.
Again, considering only economics and recent US economic data, Fed is
bound to hike today and also 2-3 times more in 2017 to take the Fed fund
rate from present 0.75% to 1.50-1.75% by Dec’17; otherwise Fed may fall
behind the inflation curve and the situation may be out of control later.
But in reality, Fed may not go at par pure text book economics and may
be driven more by politics & reality of USD strength; otherwise Fed
should have hiked multiple times in 2015-16 itself rather than a
symbolic one 0.25% hike in a year.
As now, it seems that Yellen’s political boss Trump is himself against a
stronger USD contrary to his earlier election rhetoric; Fed may not hike
today and will only talk about rate hike probability for the next
quarter (June’17) with a hawkish script. For this, Yellen may take the
excuse of a tepid wage growth and uncertainty about “Trumponomics”
(actual trajectory of fiscal/infra spending & tax cuts).
Ultimately, a stronger USD because of perception of Trump’s huge fiscal
spending plan and monetary policy divergence between Fed & other G-10/20
central bankers may not be good for US economy and corporate profits
itself and if Fed goes on for multiple rate hikes in 2017-18 (6-8
times), then it will make USD/US bond yields more strong and in that
scenario, both US as well as global economy may suffer a jolt. But,
again after so much hawkish scripts for the last few weeks, if Fed do
not hike today, then there will be severe lack of credibility on the
part of Fed and USD may be also doomed, creating a “risk off” trade
around the global financial market.
US most probably will try to arrive at some co-ordination with other
countries/economic block like Japan (BOJ) and EU (ECB) in the G-20 meet
tomorrow, whereby BOJ/ECB may also respond appropriately to the Fed’s
hawkish stance and turned themselves hawkish from the present
dovish/accommodative/neutral stance. ECB is already talking about rate
hike in 2017 before QE ends in Dec’17; BOJ may also leave the door open
for some types of tapering and in that scenario, Fed should have no
problem in multiple hikes; otherwise expect only 1-2 hikes in 2017 by Fed.
Today US reported:
Headline CPI for Fed (YOY): 2.7% (estimate of 2.7%; prior 2.5%)
Core CPI for Feb (YOY): 2.2% (estimate 2.2%; prior 2.3%)
Core retail sales for Feb (MOM): 0.2% (estimate 0.2%; prior 1.2%-Revised)
At 0.75% Fed rate, the real rate of interest (RRI) in USA may be
negative at (-) 1.95% (0.75-2.7) contrary to the positive Indian RRI of
(+) 2.6% (6.25-3.65).
At present, INR & USD bond yield (10Y) differential is around 4.286%
(6.868-2.580); if Fed goes for multiple rate hikes in 2017, US 10YTSY
bond yield may break 2.65% barrier easily and further rally towards
3-3.25% and in that scenario, to keep the USDINR bond yield differential
at present level, RBI has to also hike in 2017 by at least 1-2 times;
otherwise FPIS may exit Indian bond market, which is very important for
the Govt to fund its fiscal deficit. India may be one the rarest safe
country in the world now; having stable macro economy & political
stability is offering so much high yields for its debts (bonds) and thus
together with its high EQ market returns, it’s a favourite destination
of FPIS.
Irrespective of any Fed hike or no hike today, it may be safe to assume
that “easy money” policy by the major central bankers or four pillars of
the global economy (Fed/BOJ/ECB/PBOC) may be very close to an end until
the global economy faces another recession cycle as in 2008. We may see
some types of tapering; multiple rate hikes and even balance sheet
squeezing by these major central banks in order to prepare themselves
for another probable cycle of global recession in future. EM as well as
Indian market may also be affected more or less due to these central
banks tightening either directly or indirectly.
Indian rupee got significant strength after NAMO’s emphatic win in UP
election on the hopes of more reforms and political stability. Also,
FPIS related demands for INR may be responsible for the recent strength
and RBI has to intervene in the market by giving buying support for the USD.
*Technically, USDINR-I (LTP: 65.81) has to sustain below 65.45 for
further fall towards 65.10-64.75 & 64.55; otherwise it may bounce back
towards 67 area again.*Actual Fed action & subsequent commentary may be
the trigger for tomorrow/next few days.
Apart from Fed, domestically all eyes may be on tomorrow’s GST meet to
see its final shape & the probability of its actual implementation from
July-Sep’17. Apart from GST/tax reform, Govt has to also deliver reforms
in the land & labour, multi-brand retail, judiciary etc along with an
effective resolution of huge banking NPL & tepid private investments.
The list is long and the market expectations for some big bang reforms
are skyrocketing after BJP’s massive win in UP as there are virtually no
political oppositions now and almost 65% of Indian states are now under
BJP, either directly or indirectly.
<https://3.bp.blogspot.com/-adU8yZYJr7g/WMlXBOjHf3I/AAAAAAAAK68/SUXywkcpFc0M-qOlpdxJyy9Zn9zOIbq1QCLcB/s1600/SGX-NF-PATTERN-15-03-2017.png>
SGX-NF
<https://4.bp.blogspot.com/-K3hEqxDLkjw/WMlV_VBcUAI/AAAAAAAAK6s/hJpdQ1vvtQkYo1ZCzA_QxH4Sj87Yzbt4gCLcB/s1600/BNF-PATTERN-15-03-2017.png>
BNF
<https://2.bp.blogspot.com/-QRlTPmbxSoc/WMlWDskUhmI/AAAAAAAAK6w/mTKFPQ9VlBQWBaJJ71bX4qsPp82nb9F_ACLcB/s1600/USDINR-PATTERN-15-03-2017.png>
USDINR
--
Thanks & Regards,
Asis Ghosh
--
Kindly email stock reports at
STOCKRESEARCHER@googlegroups.com
For sharing knowledge
-- NIFTYVIEWS.COM NOW A FREE OPEN SOURCE WEBSITE.
http://www.niftyviews.com/
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture.The administrator of
www.Niftyviews.com just provide a platform for the authors to express their opinion
and take no guarantee for the genuineness of the same."ANY member of this forum
doesnt prepare or publish any research report; or ii. provide research report; or
iii. make 'buy/sell/hold' recommendation; or iv. give price target;
---
You received this message because you are subscribed to the Google Groups "Niftyviews.com" group.
To unsubscribe from this group and stop receiving emails from it, send an email
to stockresearcher+unsubscr...@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.