Nifty May Open In Deep Green As NK Tension Fades To Some Extent; But May Be Under Stress On Concern Of More “Shelling” By SEBI & Govt’s Reported War On Black Money Involving Dalal Street, Bollywood & Developers And Muted Q1 Earnings

Market Mantra: 14/08/2017 (09:00)

SGX-NF: 9780 (+42)

For the Day: 

Key support for NF: 9775/9740-9690/9665

Key resistance for NF: 9830/9860-9925/9950

Key support for BNF: 23800-23600

Key resistance for BNF: 24250-24450

Hints for positional trading:

Time & Price action suggests that, NF has to sustain over 9830 area for further rally towards 9860/9895-9925/9950 & 10020-10065 area in the short term (under bullish case scenario).

On the flip side, sustaining below 9800 area, NF may fall towards 9740-9690/9665-9605 & 9560-9525 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24300 area for further rally towards 24450-24550 & 24700-24900 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24250-24150 area, BNF may fall towards 24090-23800 & 23600-23300 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Aug) may open around 9780, almost 42 points up tracking positive global cues after NK-US tensions fades to some extent following reports that both the Govts were engaged in back-channel diplomacy talk for months despite the ongoing “war of words” and NK’s missile game.

Apart from Nuke insurance, another reason that US may not attack NK immediately as a significant number of US citizens are still in NK captivities and although, Trump may be in “war mood”, the US defence ministry is still favoring diplomacy over “war-mongering”.

On Friday night, Chinese Prez also called Trump to calm down over NK issues and advised him not to engage in further “fire & fury and loaded & locked” types of comments, despite US is putting significant pressure on China for the IR & trade protection issues as China has failed to convince NK to come in line!!

Thus, all these along with no further fresh NK tweets from Trump on the weekend may have been able to calm down the nerves of the market and subsequently, USD is able to gain some strength despite a subdued US CPI on Friday weekend and an upbeat GDP from Japan in the morning today coupled with some subdued China economic data (IIP, Retail sales, fixed asset investments).

Overnight US market (DJ-30) also closed almost flat around 0.07% higher, but well off the low tracking reports of NK-US back channel talks (truce) and a subdued US CPI and some dovish scripts form various Fed speakers including Dudley.

Basically, market may be discounting now a Fed hold in Dec’17, but start of a gradual QE/BS tapering from Sep-Dec’17. Thus, a lower Fed rate (US bank interest), a relatively tighter US job market with decent wage growth and a lower inflation in the US economy, which is not runaway, making the overall real US wage growth of around 1% like a goldilocks situation for the US economy & the market.

A lower USD may be also positive for the US earrings (export income) & imported inflation and thus any dooms day like correction in the US market is being seen as a good buying opportunity for the investors, coupled with steady Q2 earnings so far.

Back to home, Indian market has also opened in positive mood amid supporting global cues after 5 days of relentless selling coupled with SEBI “Shelling” and muted report card from some of the frontline blue chips, we should have some initial short covering today.

But, market may come under renewed pressure after reports that SEBI/Govt may continue their surgical strike against black money/corruption as more & more well known cos (Shell), brokerage houses, Bollywood links and real estate developers are in SEBI scanner for possible money laundering and BS/PL inflammation including dubidious PE/foreign investments.

After terrible IIP data on Friday, all eyes may be also on the WPI/CPI today, to gauze RBI’s concern and the Govt’s complacency over India’s inflation trajectory.

 SGX-NF