-------- Forwarded Message --------
Subject: Market Mantra: 8530-8480 May Be Interim Support For Nifty Fut---Surprise Fall In CPI May Help
Date:   Fri, 14 Oct 2016 09:43:59 +0530
From:   Asis Ghosh <asis...@gmail.com>
Reply-To:       asis...@gmail.com

As par SGX indication, NF may open around 8590, almost flat following some recovery in overnight US market.

*Technically, NF has to sustain over 8565-30* area; otherwise it may fall towards 8485/65*- 8415/8395 zone for the day.*

*For any meaningful strength, NF need to stay above 8610/55* area for further up move towards 8695/8715*-8750/75 zone for the day.*
*But, probable weekly close for NF below 8750 area may be still negative for the overall market in the short to mid term.*

*Similarly, for BNF (LTP: 19022), immediate support may be around 18800* area and sustaining below that, it may further fall towards 18700/650*-18400 zone for the day.*
*For any strength, BNF need to stay above 19050-150* area for further intra rally towards 19200/250*-19375/600 zone for the day.*
*Any weekly closing below 19600 for BNF, technical picture may be still bleak for the short to mid term, despite some intra bounce.*
Overnight US market recovered to some extent from deep loses as bad China trade data may be an excuse for Fed to be on the sideline in Dec'16.

But, later better than expected drop in US jobless claims and hawkish scrips by a Fed member again convinced the market for a definitive rate hike by Fed in Dec affected the sentiment and US market closed down by only 0.25%.

Better inventory data also helped the oil & "risk on" sentiment to some extent. For SPF (LTP:2125), immediate support is around 2115-05 and it has to sustain above at least 2140-50* area for any meaningful rebound. Today's US retail sales & Yellen speech may provide some volatility.

Today's morning China CPI data (1.9%) also came above market expectation (1.6%) and PPI also came above zero (+0.1%) after many years. This may be also an indication that Chinese economy is stabilizing and undermine yesterday's tepid trade data, which may be seasonal in nature. Subsequently, again USD is getting some strength as China jitters fear may be waning (a real catch-22 situation indeed !!).

Also, there is still concern about Brexit uncertainty as UK goes to parliament to debate it and there is also a case is going on in the HC there.

But, as par EU official, there is no scope for any "Soft Brexit" and alternative of any "Hard Brexit" is only "No Brexit". Thus , it may be a double whammy for UK as well as the whole EU concept.

Among all these global headwinds, India has some tailwinds in the form of sudden fall in CPI (4.31%), which may ignite some rate cut hopes in Dec'16 by the RBI again.

But, with 3M average CPI at around 5.15% and transmission issues along with 7-CPC induced probable inflationary impact, Patel/MPC may prefer to watch more data & WPI trend before any real action in Dec'16 and may cut in Feb'17.

As par some reports, Govt may be also planning to boost some extra capex (50000-60000 cr) in H2FY17 for infra spending and this may also help the Indian market sentiment.


     Nifty "Plunged" Amid Tepid Global Cues & Reports Of SIT Probe On

*Market Wrap: 13/10/2016*

Nifty Fut (Oct) today closed around 8581 (-1.82%). In the last 30 minutes, NF recovered a bit (short covering), after it cracked to the session low of 8551. NF made an opening high of 8678 for the day.

*Technically, for tomorrow (14/10/2016), NF has to sustain above 8540-505* zone; otherwise it may fall further towards 8485/65*- 8415/8395-8315/8275 area in the immediate to short term.*

*For any meaningful strength, NF need to stay above 8600-635* area for further up move towards 8675/8715-8750/8800*-8850/8875 zone in the immediate to short term.*

Indian market today opened gap down by nearly 75 points (NF), after two days trading holidays following tepid global cues and weak Asian Market.

Apart from FOMC induced strong chatter of Dec rate hike, China trade data primarily spooked the global market today.

In addition to the negative global market, there was also another report that SIT is probing the black money angle of the P-Notes and asked SEBI for detailed information about the actual beneficiary and money trail of it and SEBI has already submitted the same to the Govt investigative agency working under the SC. This may be the prime reason for today's "risk aversion" for the Indian market, which clearly underperformed the global peers despite two holidays time correction (with global markets).

Indian market sentiment was also affected today for tepid macro data (IIP) released after market hours on Monday. All eyes will be on the India CPI data today (consensus 4.80%) for an overall assessment of next RBI rate cut hopes in Dec'16. There were also various market buzz ranging from renewed geo-political issues like missile strike by US to Yemen rebels (ISIS) in response to yesterday's failed missile attack on a US naval ship, Russia-US tension over Syria ceasefire issue and even an imaginary talk of "World-War-III" preparation by Russia (??).

But, the global market has not reacted to such geo-political tensions and the main reason for today's mini "blood booth" in the Indian market may be domestic rather than global events. Govt may have to clarify this SIT probe news for P-Notes.

Bank stocks were in pressure today after some reports that Banks (PSBS) are increasingly indecisive about loan recasting(CDR) or F&F settlement of their NPA/NPL, which may be critical for revival of both (lenders & borrowers).

Today Nifty was supported to some extent by IT counters (strong USD), Maruti (news of JV between Toyota & Suzuki and weak Yen), Cipla (Positive US FDA news).

Today's Chinese trade balance came bad at around $41.99 bln against market expectation of $53 bln. Moreover, export contracted by around 10% against estimate of 3.3% gain and there was also some visible contraction in Import (-1.9%).

Overall trade data may be an indication that, along with Chinese growth, global trade or growth may also be waning, specially in the EU zone. The weakness in Chinese export may also put pressure on PBOC to devalue Yuan further, which is already at 6 years low and may also accelerate outflow. As par some reports, Chinese outflows already accelerated last month despite attempt of masking it by the Chinese authority and together with some other concerns like Chinese NPA/NPL & real estate bubbles, global market has a moderate "risk off" day today. Though, its too early to say that the China's tepid trade data today is the beginning of a new trend or just a seasonal one amid slump in steel exports, it may be also an excuse for Fed to stay on sideline in Dec'16, if such Chinese jitters continue in the months ahead. In that sense, bad Chinese data may be good for "risk on" trade (after some initial market panic). Yesterday's FOMC minutes also has nothing new for the global market; but the overall hawkish tone was hawkish (although some caution for tepid inflation). Also a known Fed dove like Evan's tacit admission that Dec'16 rate hike may be appropriate has made the FFR hovering around 67%. Thus the global market may be preparing itself for the impending Dec'16 and 1/2 hike in 2017.

Fed never act without telegraphing the market well in advance and for that FFR 65-75% range may be appropriate as it implied that Fed is successful to communicate the market after months of disbelief and uncertainty about its monetary action. The surging USD TSY yields may be an appropriate indication for the same.

Thus Fed will be in action in Dec, if there is no geo-political & economical shock, like "Trumpism", China jitters, EU banking crisis and turbulence in global financial market for "Brexit" (hard or soft).

For Brexit, there will be now UK Parliament debate and a petition will be heard in the HC there. But, be it "hard" or "soft", a "Brexit" is a Brexit and EU may not allow UK to take the dual advantage for both sides for long (devalued GBP & EU/EZ free market access). Thus, UK has to decide it sooner rather than later and if prolonged, UK's own economy may suffer more for the ongoing Brexit uncertainty despite advantage of a weaker currency.

Global sentiment was also hurt again by some reports that ECB is going for some bond buying tapering despite recent denial by Draghi/ECB authorities. Also there was no meaningful progress in negotiation the DB & US-DOJ fine issues.



Thanks & Regards,

Asis Ghosh

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