Market Mantra: 07/08/2017 (09:00)

SGX-NF: 10090 (-21)

For the Day:

*Key support for NF: 10070-10045/10000*

*Key resistance for NF: 10155-10205*

*Key support for BNF: 24900-24700*

*Key resistance for BNF: 25050-25150*

*Hints for positional trading: Strategy-SELL ON RISE*

*Time & Price action suggests that, NF has to sustain over 10205 area for further rally towards 10275-10325 & 10380-10455 in the short term (under bullish case scenario).*

*On the flip side, sustaining below 10185-10155 area, NF may fall towards 10070-10045/10000 & 9935-9865 area in the short term (under bear case scenario).*

*Similarly, BNF has to sustain over 25150 area for further rally towards 25275-25500 & 25695 -25865 area in the near term (under bullish case scenario).*

*On the flip side, sustaining below 25100-25050 area, BNF may fall towards 24900-24700 & 24600-24400 area in the near term (under bear case scenario).*

As par early SGX indication, Nifty Fut (Aug) may open around 10090, down by almost 21 points tracking mixed global/Asian cues amid a blockbuster US NFP report on Friday, but ongoing geo-political tensions over NK, political drama over Trump’s alleged Russian links and even a buzz of a small scale conflict between China & India over the Dokalam LOC (Sikkim) issue.

Overnight, on Friday weekend, most of the EU markets were closed with handsome gains amid mixed earnings, but fall of EUR/EUR bund yields to some extent as USD soared after the upbeat job report coupled with renewed hopes of an impending US tax cut/reform legislation after WH economic adviser Cohn has indicated for the same.

US market (DJ-30) also closed higher (+0.30%) supported by upbeat economic data coupled with upbeat report card from some of the banks & financials. But a higher USD may also affect the US market sentiment in the days ahead as a weak USD may be one of the primary drivers of the US stock market coupled with an upbeat earnings; over 72% of the S&P companies may have produced results better than market estimate in Q2.

A lower USD because of overall soft economic data, subdued inflation and an apparent dovish Fed seems to be good for US corporate bottom line (exports income) and may be also good for the imported inflation in the US economy; overall it looks like a goldilocks situation, where job market is quite tight and producing jobs with decent earnings/wage growth without any runaway inflation in the economy; i.e. not sufficient enough to create an unabated wage inflation.

Back to home, Indian market continue to haunt by the concern of stretched valuations amid mixed Q1 report cards despite Friday’s closing hours euphoria about Govt’s move to list a mega ETF (Bharat-22) comprising of the CPSE, SUUITI & PSBS trim its holdings gradually in those companies.

Govt may be also very concerned about non-transmission of input tax credit (ITC) to the consumers by small retailers/traders across the line and various channel checks may be also indicating that in Q2 also, there may be some GST disruptions as most of the small retailers or traders are not ready for a GST registration at all.

A strong INR even after hawkish cut by RBI last week may be also not good for the Indian market (Nifty), being an export heavy index, although it may be good for the overall import oriented Indian economy.

Govt may now reconsider to bring the petro products (petrol & diesel) in the GST with a reasonable tax component as overall tax collections & compliances from other sources is now gradually improving after DeMo, UID & GST; a lower gasoline price in line with the international prices may also act as a stimulus for the Indian economy, which is historically high for decades, being one of the easiest tax revenue source for the Govt.

Overall, tax component on petro products in India may be around 75% on an average, which is far greater than global average of around 25%.



Thanks & Regards,

Asis Ghosh

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