Tuesday 1 August 2017

Nifty May Open Gap Up Tracking Positive Global Cues Amid Renewed Hopes Of Trumpcare & An Upbeat Caixin Mfg PMI Out Of China; All Eyes May Be On India’s Mfg PMI Today Ahead Of RBI Tomorrow & Ongoing Q1 Report Cards



Market Mantra: 01/08/2017 (09:00)

SGX-NF: 10125 (+23)

For the Day:

Key support for NF: 10115/10070-10000/9985

Key resistance for NF: 10155-10205

Key support for BNF: 25050-24850

Key resistance for BNF: 25150-25275


Hints for positional trading: Strategy-SELL ON RISE

Hints for positional trading:

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 10115/10070-10000/9985 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 25050 area for further rally towards 25150-25275 & 25485 -25695 area in the near term (under bullish case scenario).

On the flip side, sustaining below 25000 area, BNF may fall towards 24800-24650 & 24350-24200 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Aug) may open around 10125, almost 23 points up following positive global/Asian cues after renewed hopes of Trumpcare, this time by Trump’s executive power amid lingering US political jitters.

Also, today’s Caixin MFG PMI from China for July came upbeat as 51.1 against estimate of 50.4 (prior: 50.4) and being a trusted private data, market believes it in more; subsequently both China & Hong-Kong are trading now around 0.50% higher and also boosted the overall global market sentiment on hopes of reflation & China growth.

Overnight, US market also closed almost flat amid mixed US economic data and renewed political concerns; DJ-30 has closed around 0.28% up supported by Boeing, while broader market was dragged by FANG/Tech stocks.

In a ongoing political drama, Trump again fired his WH spokesperson (communication director) just 10 days after appointment; Trump most probably is trying hard to get his trusted circle of WH officials. In another development, there is some report that Trump personally dictated his son’s misleading testimony to US senate, which may be a culpable offence and he may face some kind of criminal investigation.

All these ongoing political entertainment at WH is keeping the USD lower and coupled with that better economic data coming out of EZ is making EUR stronger & EU bund yields higher, which may be not good for risk-on trade; European & global market may come under pressure; although a lower USD may be good for US market.

Again, a lower USD may be good for overall Indian economy, being largely a import oriented country, it may not be good for Nifty earnings as almost 60% of them may be generating from export income.

Back to home, all eyes may be on India’s MFG PMI today, which is expected to come around just above boom/bust line at 50.8 for July against 50.9 measured in June amid GST disruptions.

Although, it’s now almost certain that RBI will cut rate by 0.25% tomorrow, any disappointment or hawkish outlook may also affect the market sentiment in a significant way.

Another point is that although, PSBS (SBI etc) are slashing their savings rate aggressively, keeping the MCLR at present level to improve their NIM, it may not amuse the Govt also as it may be a political issue. If Govt does not slash the small savings rate correspondingly, we may see also flight of deposits out of PSBS to other public sector entities like post office savings or other small savings instruments.

As real rate of interest (RRI) in India is historically high, it need to be come down in accordance with the present global standards to stay in the game of export as domestic consumption may me fast approaching a saturation point; the abnormal high RRI & also high inflation for decades may be one of the primary reasons behind India’s huge stressed assets.



 SGX-NF

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