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Market round-up for week ending 18 DEC 2016

General Observation:

After demonetisation, Government and RBI is still optimistic about GDP growth forecasts whereas all other global & domestic economics who are on payroll of various private corporations are in view of 1.5% lesser growth going forward from current levels of 8%.

However, we feel demonetisation was a important step towards implementation of flawless GST, therefore reduction in net Tax rates going forward into 2017-18 FY & beyond.

Control on Fake currency, funding for crimes including terror, drugs, riots, political bandhs & voters’ bribery are other added advantages of this demonetisation exercise.

All these benefits would be short lived if Government fails to carry out follow-ups.

Tax compliance is key to success in globalised economy. However, unaccounted cash was accumulated over time because of various inefficiency exploited in form of Govt sourcing norms without transparency (lack of checks & balances) plus Taxation policies of past.

Though we agree that demonetisation policy (on paper) looks very good & further economy growth enabler but implementation is the only differentiating criteria on grounds.

However, this demonetisation can’t root out economical corruption completely.

Corruption can only be controlled by increasing supply of quality goods & services for which we need investments and that comes from investors who are sure about safety of their capital with some degree of assurance to get reasonable returns on employed capital.

 

 

Trading Observation: 

NIfty is having confirmed resistance at 8300 Spot Index levels on closing basis.

And if at all Market gives closing above 8300 then expect minimum 300pts one-side recovery to 8600 & beyond levels, and that is possible even during December expiry, itself.

In that case this will be super bullish, confirmed breakout trade for biased bulls.

Otherwise, trading positions should be to short sell at current levels and keep reversal strategy in-tact, provided market is giving closing above 8300 whether tomorrow or later.

Key here is chart pattern. That should not change. Therefore our confirmation is required.

 

DOWJONES: 19800 is important resistance on closing basis. Friday closing 19757

HANGSENG: 23000 is important resistance on closing basis, Friday closing 22761

VIX S&P500 is at lowest trading range, which means any time correction could start.

Only joker is the pack is Dollar Index and RUSSEL 2000’s price activity going forward. That’s is beyond our understanding at-least for the time being.

 

Economical events lined-up for upcoming week:

GST Counsel meeting to end dead-lock over administrative control of jurisdiction over assesses and finalisation of model GST, IGST, Compensation law.

If by end of tomorrow GST counsel remains undecided then in all probabilities GST implementation would be extended from self imposed deadline of 1st April 2017.

Winter Session of Parliament is ending on Friday, 16th December 2016

This possible delay in GST  roll out is already discounted by market forces, we guess so.

 

ECB refused to help crisis hit Italian Bank. Now in this context state bailout is only possibly which can post-pond prevailing banking crisis. By tomorrow evening we would be having full clarity on the matter. Which has make or break implications for EU, Euro Zone.

 

FOMC:  Come Wednesday US Fed is expected to announce 25 basis points hike in benchmark rates, which more or less discounted by market forces. However, market is circumspect about inflation, growth assessment of FED for 2017 & beyond.

 

OPEN POSITIONS:

Currently we have 4 open positions and holding all with 8300 above Spot Index Closing basis, namely Nifty, BankNIFTY, UPL & CADILAHC (all are short sell & in futures)

~ Majority of clients are having 4 lots NIFTY (2lots DEC at 8275 and 2lots JAN at 8040)

~ Majority of clients are having 1 lot each in BankNIFTY, UPL, CADILAHC

We had DEC 2 Lots NIFTY buy positions from 8060 which was closed at 8265 on 30th Nov.

 

*Special Mention: Unscheduled news, events, announcements etc does not reflect on price charts, therefore beyond our analysis & understanding. In this case, we need to take quick & drastic decisions in real time to adjust positions accordingly.

Therefore better to keep suggested capital free and at the same time willingness to deploy whenever that required.

You are requested to take reconfirmation during market hours before acting on above trading analysis & write-ups thereof.

We are not biased for BUY or Short Sell side but writing what (we are) noticing on charts.

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