Not much positives today
Market's muted response to first phase of stimulus details
Global markets are on correction mode again
Global Markets: - Negative
Both US and European markets closed in deep red yesterday with more than 2.00% drop. The Emerging market ETF traded in US continued to slide. Volatility index is raising in US
ASIAN Markets this morning: - Negative
Asian markets this morning is trading in negative territory. SGX nifty dropped yesterday night and currently trading more than 100 points down from yesterday’s Nifty close. SGX Nifty has given up all the gain it made after announcement of large stimulus package.
Wholesale price inflation (WPI) will be released by 12.00 noon today. WPI is expected to fall to 0.30% (Vs 0.9% previous)
India: First phase of Stimulus details seems to disappoint markets
Surprise announcement from government on fiscal stimulus caused spike in the stock markets. However yesterday’s announcement of first phase of details on stimulus seems to have disappointed markets. Stimulus does not offer much of real money except for the government guaranteed loans to support MSME, DISCOMs and deferment of tax liabilities. Loan amount has to be offered by the banks. There was no announcement on bad bank or recapitalization of banks that would enable banks to lend all the loans that is being promised.
Bond markets reversed losses and yield fell back after government officials indicated that RBI will be asked to monetize some of the additional borrowings planned by the government.
Escorts, Biocon, Tata consumer will declare their numbers today.
NIFTY -Technical Bias:
Price Action & Pattern:
Although the initial euphoria on stimulus announcement caused SGX Nifty to spike and Nifty to open gap up. The momentum was lost during the day yesterday. Nifty could not break out of the range yesterday. Today SGX Nifty is already down more than 100 points and global markets sentiment are not helping either. Therefore, Nifty is expected to gap down and fall towards the rectangle bottom 8800.
Depending upon the level of gap down, a bear vertical spread is appropriate