-------- Forwarded Message --------
Subject: Nifty Snapped 4 Day Rally In A Range Bound Market Ahead Of BOJ & Fed
Date:   Wed, 21 Sep 2016 06:26:42 +0530
From:   Asis Ghosh <asis...@gmail.com>
Reply-To:       asis...@gmail.com

Nifty Fut (Sep) today closed around 8803 (-0.33%) in a range bound trade after opening gap down. Today's day high & low was around 8820 & 8786.

*Looking ahead, for tomorrow (21/09/2016), sustaining below 8785 area, NF may fall towards 8735/8705-8665/35*-8570/40 zone immediately.*

*On the other side, sustaining above 8825 area, NF may further rally towards 8875*-8905/25-8975/95 zone for the day.*

Yesterday, US market fall in the late trade and closed almost flat despite trading higher earlier in the Asian & European session as market participants choose to curtail positions ahead of Fed & BOJ.

Oil got some support early yesterday as there was some renewed optimism about OPEC/Non-OPEC production freeze and geo-political tension in Libya and Nigeria.

In the absence of any meaningful cues domestically, Indian mkt may also dancing with the global tunes as of now.

Any definitive indication of Dec hike by Fed tomorrow; i.e. extreme "hawkish hold" stance and along with that hawkish or even neutral BOJ may make global as well as Indian market extremely volatile in the coming days.

Rather than Fed, BOJ announcement tomorrow morning around the Indian market opening time may be more important as its almost certain that Fed is not going to hike immediately leaving the door open for the Dec with a bit hawkish guidance in order to make everything in balance just before US presidential election in Nov. FFR is now indicating probability of Sep hike as around 22% and Dec hike around 59%.

BOJ, on the other hand is expected to slash rate further to (-)0.2% from the present (-)0.1% with some reverse twist to steepen the yields of JGB bond in the long end, keeping the short end bond unchanged; i.e BOJ may take the NIRP route more proactively instead of its present strategy of bond buying @80 tln Yen per year as it is increasingly difficult to buy eligible bonds and ETF buying is also causing some stock market bubble. BOJ may thus announce some type of tapering to the tune of 10 tln Yen per month in the present bond buying programme.

Alternately, due to time difference with the Fed meet, BOJ may simply be in the sideline with a message for some action in the coming months as it want to see some result for the previous/ongoing QQE.

Overall global market is worried by some extent as central bankers seems to be increasingly out of ammunition and basically pleading for more Govt fiscal & structural measures.

After all, with so much monetary stimulus for more than decades, although Wall Street (stock market) has significant "inflation" (elevated asset price), inflation is virtually no where in the "Real Street" (real economy) as all the liquidity may be finding its way to the wall street rather than the real street.

In that sense, QQE (easy money) has so far failed to create any meaningful consumer demand and in contrast helped to create substantial supplies by creating overnight zombie companies which are responsible for the present mismatch in supply & demand (e.g. for Oil, Steel etc).

Domestically, all eyes will be on the progress of GST and Indo- Pak geo-political tension, Q2FY17 result and FY-18 budget talks in the coming days apart from the global event (Fed/BOJ/China credit concern etc).

There was also a report yesterday that at present our PM enjoying nearly 80% approval rate despite some pessimism about slow progress of vital reform and some other issues.

Although the approval level of NAMO was around 87% last year, this may support the positive sentiment about Indian mkt having political stability and appeal of demography, democracy & development in the long run.

As par some report, PM has given final authority to the army for an appropriate response to Pak for the URI terrorist incident. Although, Indian Army indicated that they are not in a hurry and will response at an appropriate time & place, market is worried to some extent for the ongoing Indo-Pak geo-political tension ahead of UP state election. At present, Govt is apparently taking some diplomatic steps to isolate Pak with the rest of the world and testing some mid-range missile frequently to put pressure on the US to persuade Pak not to allow any terrorist organization to use its soil. Being in the election year, US will never allow an immediate or even future conflict between the two nuclear nations.

Today, although Moody's has praised various incremental reform in India, it may be in no hurry to upgrade the rating in the near future owing to the problem of twin balance sheets & tepid private investments in the country.

Also as par some reports, Q1FY17 direct tax collection growth was below estimate primarily because of PSBS & ONGC (one time). Incidentally, Moody's also expressed some concern over the current fiscal deficit figure as it is already reached around 74% last month. As such, we may see some slowdown in the Govt capex for the H2FY17.

Quite surprisingly, Jubilant Food CEO & CFO resigned from the company after selling substantial stake in the last few months. As its an expensive scrip in the mid-cap category, this may also affect the "mid-cap frenzy" sentiment in the coming days.

Today Nifty was supported by ONGC (better GRM out look), Metals (Tata Steel/Hindalco for Govt plan of additional import duty), Infratel, Pharma scrips (Cipla/Lupin etc as US FDA fiasco may be bottoming out), Yes Bank (short covering ??).

Nifty was mainly dragged by RIL, ITC, SBI, Hero Motors, Adani Ports (Australian coal mine buy), Infy, Tata Motors (JLR recall in US) and cement scrips.



Thanks & Regards,

Asis Ghosh

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