*Market Wrap: 22/03/2017 (19:00)*
*NSE-NF: 9047 (-96 points; -1.05%)*
*NSE-BNF: 20847 (-244 points; -1.16%)
*
*Vital support for NF: 9025/8995-8950*
*Vital resistance for NF: 9125-9165/9195*
*Vital support for BNF: 20700/20650-20450*
*Vital resistance for BNF: 21100-21250/21350*
*Time & Price action suggests that, Nifty Fut (March) has to sustain
over 9125 area for further rally towards 9165-9195 & 9235-9275 for
tomorrow/ in the short term (under bullish case scenario).*
*On the other side, sustaining below 9105 area, NF may fall towards
9060-9025/8995 & 8950-8865 area for tomorrow/ in the short term (under
bear case scenario).*
*Similarly, BNF has to sustain over 21100 area for further rally towards
21250-21350 & 21500-21650 area for tomorrow/ in the near term (under
bullish case scenario).*
*On the other side, sustaining below 21050 area, BNF may fall towards
20950-20650 & 20450-20325/195 zone for tomorrow/ in the near term (under
bear case scenario).*
Nifty Fut (March) today closed around 9047 after making an opening
minutes high of 9130 (actually 9098 as par tick chart) and session low
of 9045 and closed almost 1% down amid tepid global cues and domestic
worries of stretched valuations and lingering concerns about some of the
banking shares for depressed credit growth & farm loan waiver rhetoric
in UP/other states.
Indian market today opened gap down around 9081 (-74 points) following
overnight slump in US market (-1.15%) after many weeks. Although US
market rallied quite relentlessly after Trumpism without any major
correction just on the hopes of Trumponomics, market was also extremely
overbought and thus a time & price correction was long overdue;
valuations are also stretched. A dovish hike by Fed and subsequent fall
in USD/US bond yields and other aspects of Trumpomania may have acted as
just a trigger.
One of the major trigger may be ongoing US political risks, in which FBI
director’s statement about Trump’s alleged Russian connection, helping
him to win the US election may be a major headwind for the market. If
Trump is eventually accused as a “Russian Spy” directly or indirectly by
FBI or his political opponents (RNC), he may be impeached by the US
congress/senate and that may be turned as quite serious for the “risk
trade”.
Another point is that, due to ongoing political squabbling in US & Trump
administration regarding various issues like Obamacare etc, market is
apprehending that Trump may not be able to focus on his core theme of
Trumponomics (huge fiscal/infra spending & tax cuts) in the near term at
least till 2017. As of now, Trump’s focus is on the defence & border
wall (Mexico) spending by cutting “unproductive” spending elsewhere in
the US budget. But to be very frankly, for the huge Mexican border wall,
Trump may not be able to garner the political & funding support from US
congress/senate and above all, he may not find enough workers in US to
build such border wall in the first place!!
Analysts are worried that, if the slump in US equity market is
continuing, it may have a spillover effect on the US consumer sentiment
& spending, which is already tepid despite recent spate of upbeat US
economic data; wage inflation may be no where as par Fed’s own
assumption. This may in turn also affect adversely Fed’s normalization
path in 2017 and thus USD is getting further jolt; risk trade is off and
smart money may be flowing from the riskier EQ assets to the safety of
the US bonds, which in turn causing bond yields down and
financials/banking shares are also being affected due to concern of NIM
(lower bond yield = lower NIM).
Also, Trump has to pass the usual budget spending plan from US senate by
tomorrow/this week; otherwise US may be stand stilled, at least
theoretically; although practically, we may see last minute passage of
the same after intense political drama as happened few years back.
Apart from various Trump Tantrums, oil & commodities (metals) are also
in bad shape due to increasing concern of supply glut and tightening
China money market. China today injected huge liquidity to stem the
alarming situation in the interbank money market, where some small
lenders have reportedly defaulted. PBOC also tightened the home loan
market (real estate) in a bid to control the bubbles. But the problem in
China may be getting serious as its overnight lending rate in the repo
market is now around 3.28%, which is higher than its 5YCNY bond yields.
Among all these global jitters, today NK also tried for some missile
tests again, which was reportedly failed; but caused enough tension in
the Japanese market. Japan was already down due to strength in Yen as
USDJPY was in free fall mode, which further exaggerated after BOJ
official’s upbeat assessment about Japanese economy/inflation.
After all, whatever be the narratives, as Fed is thinking and actually
implementing multiple rate hikes to stay ahead of the inflation curve,
other major central banks (BOJ/ECB/PBOC/BOE) may be also on the
neutral/slightly hawkish (owlish) mode from their earlier dovish stance
in order to keep parity with the Fed’s hawkish outlook and interest &
bond yield differential at present ideal level. Thus, the era of easy
money may be over and Fed may be also thinking to squeeze its huge
balance sheet of $4.5 tln in the months ahead.
*Technically, SPX-500 (LTP: 2340) has to sustain over 2330 zone;
otherwise expect more correction towards 2290-2260 area in the days ahead.*
*Similarly, watch 111 for USDJPY (LTP: 111.15); sustaining below 111, it
may further fall towards 108.50-107 zone, triggering more “risk off” trade.*
*Also, US 10YTSY bonds is in upbeat mode (LTP: 124.45) and sustaining
above 124.65-124.85 area, it may further rally towards 125.65-126.50 &
127.35 causing more fall of the bond yields & EQ market.*
Among all these global headwinds, Indian market may have also its own
concern of a stretched valuation after recent non-stop rally of almost
17% from Dec’16 low. Market is basically discounting future recovery in
earnings and hopes of an incremental or some big bang reforms by the
Govt armed by an undisputable political support.
But, despite such political advantage, it seems that Govt may be itself
not so much confident about likely roll out of the GST from July’17 as
FM today commented that “we are trying our best for a July roll out of
the GST”. As time and administrative & business preparedness may be
quite challenging, Govt may ultimately allow more time to the Nation for
further debate on GST and might implement it with the present or some
modified form from April’18 (beginning of a new FY, if not after 2019
general election).
In its present form with so many slabs of taxes (5 including a zero
rate), regulations & complexities, the GST may be far cry from the
earlier theme of “one tax one nation” and may not be much different from
the present system of VAT. Thus, a hurried implementation of the same by
July’17 for the “constitutional obligation” narrative may do more
disruption to the economy rather than any meaningful contribution
towards GDP & earnings of the business.
Today, Indian market sentiment was also down after reports of Govt
intention to sell its SUUTI stake (LT/AXIS/ITC); although the Govt has
denied it after the market hours.
Also, Govt’s stance for further “war on black money” such as fixation of
cash transaction to Rs.2 lakhs instead of Rs.3 lakhs earlier and
mandatory of “Aadhaar” (UID) card in income tax return & PAN card
application may have depressed the local market sentiment; Govt may be
quite right morally & ethically in its continuing war against black
money; but it may not be good for “risk trade” in the coming days.
<https://4.bp.blogspot.com/-DF_uFnk4Jp4/WNKMqofxhoI/AAAAAAAALAI/kPOrDC545sEsafMe-BM9wyUGT4OrgUJEgCLcB/s1600/SGX-NF-PATTERN-22-03-2017.png>
SGX-NF
<https://1.bp.blogspot.com/-iKpEqWmfxOI/WNKMsjB9YKI/AAAAAAAALAM/hBvvkskhIYoTA7z4sFkSV-jy84b3Z4LpgCLcB/s1600/BNF-PATTERN-22-03-2017.png>
BNF
<https://1.bp.blogspot.com/-CzSk1XdCpIA/WNKMvaJufnI/AAAAAAAALAQ/z6T1rJL1dMwMV7NPNTKtVmfC0TPullPtQCLcB/s1600/SPX-500-PATTERN-22-03-2017.png>
SPX-500
<https://3.bp.blogspot.com/-kibZjbmHirU/WNKMyrKWvUI/AAAAAAAALAU/7h6w-dXLjyM0P2xdI211gcsuRNYbTZrZACLcB/s1600/USDJPY-22-03-2017.png>
USDJPY
<https://3.bp.blogspot.com/-p0rGgYV_FuU/WNKM4DflKcI/AAAAAAAALAY/zBu1IzD7XvcJFcsUb9_QGd2pyysvAEhvgCLcB/s1600/US10YTSY-22-03-2017.png>
US10YTSY BOND
--
Thanks & Regards,
Asis Ghosh
https://asisghosh.blogspot.in/2017/03/nifty-dragged-by-almost-1-amid-negative.html
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