*Market Wrap: 21/12/2016 (17:30)*
*Technically Nifty Fut (Dec @8077) has to sustain over 8145-8205 area
for further rally towards 8255-8295 & 8325-8385 zone in the near term
for any “Santa Rally”.*
*On the other side, sustaining below 8040-7980 zone, NF may further fall
towards 7915-7875 & 7840-7645 area in the short term; 2016 may end in a
big “Doji” in the technical chart (indecisiveness), if it close around
7950.*
*Looking at the chart, 8200 zone may be now a big technical challenge
for the NF and consecutive closing below that, it may fall towards
7525-7425 area by next few weeks, when volume (FII) return to the market.*
*Similarly, for BNF (LTP: 18095), consecutive closing below 18000 zone,
it may fall towards 16365-15300 area in the next few months and present
down trend may change only consistent closing above 18750-18850 zone.*
Nifty Fut (Dec) today closed around 8077 (-22 points) in another day of
listless trading with six consecutive days of downtrend and finished the
day around one month closing low.
After opening almost flat following positive Asian cues, the overall
market sentiment soon turned sour on the back of ongoing concerns about
economic slowdown & political disruptions as a result of demonetization
and NF made an opening session day high of around 8124 and late last
minutes session low of 8073.
Selling pressure in the market further accelerated after opening of
European market and subsequent renewed concerns about bail out efforts
of the Italian Banks (Monte Paschi) and a EU court judgment about
Spanish banks to return excess interest collections on home loans for
around 5-7 bln EUR in a pre-2013 case.
Monte Paschi was also under immense pressure as its present desperate
effort to secure funding from private investors for 5 bln EUR is not
yielding any positive result so far and its running out of time and also
virtually out of funds.
But, eventually, Italian Govt & ECB may not let it fall at any cost;
although an amount of around 52 bln EUR may be required by the Italy to
save its fragile banking sector, which was previously estimated at
around 21 bln EUR (ECB will have to print fast unlike RBI !!!).
Indian market was also under pressure towards the fag end of the market
amid continuous flip-flops by the RBI/Govt regarding various rules of
demonetization & remonetization.
Also, banks are not itself convinced about sufficient supplies of new
currency notes after 31^st Dec’16, when Govt/RBI is planning to end the
limits of cash withdrawal from the banks. There may be still severe lack
of sufficient currency notes supplies in the banking system amid
printing, logistic and also ATM recalibration issues and some simple
maths may be showing that, it will take at least March-June’17 for
80-100% normalization. All eyes will be on the expected meetingbetween
the PAC & Fin Sec(instead of RBI Gov) tomorrow.
Indian market may be also concerned about some unscheduled (?) long
hours meeting going on with the new defence Chief and the defence
minister today for possibility of another “surgical strike” at LOC (??).
All eyes will be on the GST meeting tomorrow; although there is very
little hope for any consensus about dual control mechanism amid
political disruptions. Eventually, Govt may also “officially” accept
that there are no chances of any April’17 GST roll out and all hopes
will then be on the Sep’17 implementation, considering it’s a
“constitutional compulsion”.
But, eventually “political compulsion” may be more important than the
“constitutional compulsion” and in that scenario, it may ensure that GST
will be implemented only after 2019 general election and market is still
not discounted for that.
All eyes will also on the political developments after RAGA’s alleged
“corruption bomb” about NAMO for “kickbacks” by Sahara/Birla to see that
if there is sufficient elements in it for an expected “earthquake &
subsequent tsunami”; although hopes are very low as the matter is
already under sub-judice (in Birla case, SC already asked for more
“credible” evidences and its a known factor to the market; but Sahara
allegation may be new).
As par some reports, high frequency economic indicators for Indian
economy may have dipped significantly in Dec after moderate fall in Nov
and Q3FY16 GDP may also dip by around 1.25%. Rural consumption & economy
may be worst affected more than urban consumption after demonetization
led economic disruptions.
Apart from the short term effect of demonetization, long term effect of
the “war on black money” may also cause at least 30-40% dips in high
value consumption for India.
All eyes will be also on any “Santa Gift” & a “dream budget” for the
nation by the Govt to reduce the demonetization “pain”, just before
series of state elections, probably in Feb-March’17, ahead of schedule
to take advantage of the present “war on black money & corruptions”.
But too much populist measures/stimulus by the Govt may also cause
significant fiscal deficit for the centre and if we consider state
fiscal deficits & the present fall in revenue after demonetization,
combined fiscal deficits might be worst in the coming months.
The expected burgeoning combined fiscal deficit may be one of the
reasons for the FPI(s) to exit the Indian bond markets (G-SECS) at a
record pace apart from the country’s “political risk” after
demonetization combined with the safety of USD and perception of
“Trumponomics”.
<https://3.bp.blogspot.com/-6yYKtLuhiu8/WFqLBDZh-GI/AAAAAAAAJ4o/F9--XOMboGspLjEOt7Ke73HgeC6vlc4nACLcB/s1600/SGX-NF-PATTERN-21-12-2016.png>
SGX-NF
<https://4.bp.blogspot.com/-UKSj8S-yMio/WFqLE3ZBLrI/AAAAAAAAJ4s/K-HdMxrUwVcoYMuP3ZTSv7RrzlPyy1bFQCLcB/s1600/BNF-PATTERN-21-12-2016.png>
BNF
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA & FA Certified
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