Nifty 8061/Sensex 26242/ Bank Nifty 18084
22 Advances /28 Declines/ 1 Unchanged
“Indian benchmarks extend downtrend; Sensex slips below 26,300 mark”
Indian equity benchmarks traded on a firm note for most part of the day but slipped in red with cut of around quarter percent. The last hour of trade dragged the market to close below neutral line for sixth straight session. US dollar rose to its highest level in 14 years as the outlook about US economy improved with Federal Reserve intent on adopting higher pace of rate hikes in 2017. The markets were trading slightly in green in early deals on account of buying in front line blue chip counters. Investors continue to consolidate beaten down stocks on account of value buying amid low volumes.
The sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that the government would offer tax incentives to small businesses engaged in cashless transactions, as part of the government’s fight against the cash economy. He said the move would enable businesses with annual turnover of Rs 2 crore to save up to 30 percent in tax payments. The street took note of CRISIL report that the government’s demonetising Rs 500 and Rs 1,000 notes may yield lasting economic benefits but its immediate impact has been stunningly disruptive, with cash shortages roiling business plans. The report highlighted that the long-term aim of India’s demonetisation policy is to improve economic and public administrative conditions by forcing black markets and cash-based sectors of the economy to operate in the formal economy.
Selling crept in after confirming fears of demonetisation move hitting growth, Japanese brokerage Nomura said its proprietary indices have dipped to the lowest levels since 1996, with rural consumption showing the maximum impact. The report said the demonetisation move has hit rural consumption demand harder than the urban demand. The Nomura Composite Leading Index (CLI) for India for early 2017 has slumped to the lowest level since the series began in 1996 and is consistent with GDP growth of below 6 per cent. Investors took cautious approach after N. Chandrababu Naidu, chief minister of Andhra Pradesh abruptly distanced himself from the Prime Minister’s move to scrap high-value banknotes, as broad initial support for the radical monetary reform showed signs of crumbling. While Modi remains by far India’s most popular politician, any crack in his authority could have negative implications in state elections next year that will set the tone for his expected bid for a second term in 2019. Foreign Institutional Investors (FIIs) continued their relentless sell-offs and sold domestic equities worth Rs 535.77 crore on December 20, 2016.
On the global front, Asian markets ended mostly in red. China stocks rebounded as fears of a liquidity squeeze in the banking system subsided after risks from a bond scandal appeared contained and on a pledge to deepen reforms in state-owned sectors. Japan’s government upgraded its overall assessment of the economy, echoing the Bank of Japan’s more upbeat view, in a sign the economy may be steadying. The government also upgraded its view of household spending, exports and business sentiment, saying consumers’ mindsets are improving and exports to Asia are recovering. European shares were marginally lower but stayed close to their highest in more than 11 months as merger and acquisition activity continued to prop up the market.
Back home, select micro finance stocks were under pressure on reports that the Maharashtra government will form a special investigation team to look into complaints of irregularities and violations of RBI guidelines by microfinance companies. Gold & Jewellery stocks like PC Jeweller, Rajesh Export, Gitanjali Gems, Asian Star Company and Tribhovandas Bhimji Zaveri were trading firm on reports that the government is likely to lower gold import duty from 10 percent to 6 percent.
Now what to expect??
Nifty Future Levels
Support at 8070 and resistance 8150
Break and sustain below 8070 will take it to 7930—7850 and then to 7780 else could test its resistance level of 8150.
Further upside rally will see only above 8150.
Bank Nifty Future Levels
Support at 18050--17980 and resistance at 183002Break and sustain below 17980 … will see sharp downside panic till 17700—17550 and then to 17200 else could test its resistance level of 18200 again.
Further upside rally will see only above 18200.
Today's Top Pick
Canara Bank
Support at 286 and Resistance at 296
Break and sustain below 286 will take it to 278—273 mark else could test its resistance level of 296 again.
Further upside rally above 296 mark
Trade with levels only
More will update during market hours
