-------- Forwarded Message --------
Subject: Nifty Closed 74 Points Lower Amid Negative Global Cues Led By
Concern of China & FCNR Redemption Pressure On Indian Rupee
Date: Mon, 17 Oct 2016 19:52:07 +0530
From: Asis Ghosh <asis...@gmail.com>
Nifty Fut (Oct) today closed around 8531 (-0.86%) after a "sharp
selloff" and made an opening high of 8612 & session low of 8607.
*Technically, for tomorrow (18/10/2016), NF need to sustain over
8545-8565* zone for any intraday recovery; otherwise it may fall towards
8500/8465*-8405/8360-8315/8235 area in the immediate to short term.*
*On the other side, for any meaningful strength, NF need to stay above
8595-8620* zone for further rally towards 8670/8700-8740*/8785-8815/8875
area in the immediate to short term.*
*Overall, if NF sustained above 8565 tomorrow, then we should have some
opportunity for "Diwali Shopping"; otherwise it may be "Diwali Selling
with heavy discount" till at least 8465 area. So watch 8565-8465 zone in
Indian market today opened almost flat; but soon after opening, some
selling wave grips in, which intensified further after China
(Shanghai-B) tumbled almost 6% in noon trade ahead of Chinese GDP data
day after tomorrow. There was also some report that Chinese "debt bomb"
is ticking and together with the continuous Yuan devaluation made the
Apart from China concern, global market may be also getting prepared
itself for an impending Dec rate hike by Fed.
On Friday, Yellen in her speech hinted that Fed may look for bond yield
steepening in the long end (like BOJ??) and may also tolerate higher
inflation for US economy and together with that, the rate hike
expectation in Dec (now around 73%) made the USD stronger across the
board and bond yield surged.
There are also lots of big US corporates reporting earnings this week
and all these has made the "risk on" sentiment tepid to some extent.
Although, probability of "Trumpism” is getting reduced day by day, US
election & geo-political risk remains. As par Faber, Clinton being a
war-monger, next US presidency of her may incite serious geo-political
tension with Russia over Syria issues. On the other side, if Trump wins,
there may be less geo-political tension, but more risk of economic
instability because of his unpredictive nature & style of functioning.
There was also some renewed concern/uncertainty about Brexit (soft or
hard??), after reports came in that there was some division in the UK
ruling party (between PM& FM) over the “divorce” procedure.
Also, on Saturday, both Markel & Hollande came heavily on UK for the
Brexit negotiation and warned that UK will get access of the free EU/EZ,
only if it allows free movement of citizens.
This immigration issues may be the most contentious point in this Brexit
saga and politically sensitive for May (UK PM) also. Thus, unless &
until these negotiations get over, current atmosphere of uncertainty may
continue for UK as well as for the global market. All eyes will be now
on a Brexit related case filed in the UK HC, which will be heard this week.
Among all these ongoing global concerns including EU banking crisis,
there was some added headwinds for Indian market in the form of probable
FCNR-B redemption pressure to the tune of $22.4 bln.
Indian market sentiment may be also affected today for expected pressure
on Rupee as FCNR redemption is getting closer. Previous estimate was
around $15 bln because of some roll over; but now there are reports of
$22.4 bln possible outflow and around $10 bln position may be in
Analysts are expecting steady INR depreciation towards 70 levels in the
months ahead for this outflow and divergence between RBI & Fed's
monetary stances (strong USD).
Indian market was not sold off today because there was significant
support from some of the selected banking counters after yesterday's
deal between Essar Oil and Russian Co (Rosneft) for &12.9 bln (largest
Foreign M&A deal in India so far).
Essar, being a debt laden group, this deal may help the co to repay
major part of its huge debt, while for some of the banks
(ICICI/SBI/IDBI), it may also help to lower provisions (watch lists).
Market may be expecting more such deleveraging deals for Essar group and
other stressed Indian corporates in the days ahead.
Market sentiment was also affected by the tepid earnings/revenue growth
of the two big IT duos (TCS/Infy) and their subdued guidance, which is
Apart from Brexit & US election risk, lack of automation/AI & digital
technology may be the biggest challenge for the traditional Indian IT
cos (in software service) now.
Also Q2FY17 earnings concern may kept the market on toes as valuation
may be still expensive.
On the macro front, India reported on Friday around 4.6% growth in
exports in dollar terms after many months, which may be a sign of revival.
Looking ahead, with lots of global events & economic data this week,
domestic market will also focus on the forthcoming GST meet on 20-th
Oct, which may decide the rate of GST.
As par some reports, there may be 4 rates for the GST ranging for
essential commodities, services, sin goods and the RNR may be 18% and
the much hyped concept of "one tax, one nation" may not be there, at
least for the initial years (2019 ??) and it may more look like the
present "VAT" in the new "GST" name ("Old wine in new bottle" ??) and in
that scenario, GST's incremental contribution towards GDP may be doubtful.
Thanks & Regards,
Kindly email stock reports at
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