Nifty 7908/Sensex 25807/ Bank Nifty 17678
6 Advances /45 Declines/ 0 Unchanged
Indian equities drop to 7-month low on capital gains tax woes
Indian equity bourses commenced the fresh week on a depressing note as the benchmark indices extended previous week’s sell-off and sank by close to a percentage points to a seven-month low, on worries that capital gains taxes would rise after Prime Minister Narendra Modi said market participants should contribute to nation-building.
Though, Finance Minister Arun Jaitley later clarified that the government did not plan to impose long-term capital gains tax, it was not enough to prevent selling pressure. Finance Minister also expressed hope that demonetisation will help increase government revenue and lower fiscal deficit, leading to higher expenditure on defence and rural infrastructure. Market participants also remained cautious with the report that the GST Council could not evolve a consensus on the issue of dividing the administrative powers between the Centre and States in its two-day meeting which concluded on Friday even as it cleared all other provisions of draft model GST Bill and whole of compensation Bill. The next meeting of the GST Council will take place on January 3 and 4, 2017.
Foreign institutional investors’ pulling out also continues to weigh on equity markets. So far in December, FIIs have pulled out Rs 3,744 crore from equity markets following US Federal Reserve decision to increase interest rates by 0.25% and hinting at quicker rate hikes in 2017.
The markets are likely to remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2016 series to next month i.e. January 2017 series. The near month December 2016 derivatives contracts will expire on Thursday i.e. December 29, 2016.
On the global front, Asian markets ended mostly higher on Monday, with trading volumes remain subdued as several Asian markets were shut on account of the Christmas holiday. Chinese shares declined more than a percent in early trade over concerns about Beijing’s monetary policy to deflate various risky asset bubbles, but rebounded and ended higher as investors turned their attention to increased government spending on infrastructure to boost the economy. However, Japanese stocks ended lower as the yen strengthened a bit and banking stocks continued to succumb to profit taking. A strong yen threatens to reduce profits exporters earn abroad.
Back home, the local benchmarks got off to a sedate opening tracking the dismal leads prevailing in Asian markets. The selling pressure accentuated in the mid-morning trades as investors took to across the board risk aversion. Thereafter, the key indices oscillated in an extremely tight range through the session as market participants remained on the side-lines lacking conviction amid the persistent worries over likely increase in long term capital gains tax. Though, the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session.
FII Activity (Dec 26, 2016)
The FIIs as per Monday’s data were net sellers in equity and debt segments both, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 2089.30 crore against gross sell of Rs 3549.95 crore. Thus, FIIs stood as net sellers of Rs 1460.65 crore in equities.
In the debt segment, the gross purchase was of Rs 422.79 crore with gross sales of Rs 917.02 crore. Thus, FIIs stood as net sellers of Rs 494.23 crore in debt.
Now what to expect??
Nifty Future Levels
We clearly Indicated that market turns negative and will see sharp downside fall in it. Our sell recommended in Nifty, Bank Nifty, REC, Tata Steel, SBI, Hind Zinc, Hindalco, SPARC... All proven great.
Support at 7880 and resistance 7980---8010.
Break and sustain below 7880 will take to 7830--7780 and then to 7700 mark else it could test its resistance level of 7980---8010 again.
Further upside rally will see only above 8010 mark.
Bank Nifty Future Levels
Support at 17550 and resistance at 18000
Break and sustain below 17550 will take it to 17200—17050 and then to 16900 else could test its resistance level of 18000 again.
Further upside rally will see only above 18000.
Today's Top Pick
Apollo Tyre
Support at 184 and Resistance at 192.
Break and sustain below 184 will take it to 178---173 mark. Further downside panic will see only close below 173.
Hurdle intact at 192.00
