NIFTY ACHIEVES 8243 TARGET; 8130 IS THE IMMEDIATE SUPPORT

NIFTY ACHIEVES 8243 TARGET; 8130 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices fell 0.2%-0.6% on Friday following a sharp miss on the May jobs report.  Financial were the greatest laggards and Utilities biggest gainers.

May jobs report showed creation of 38,000 jobs, well below expectations of 162000 and casting doubt on hopes for a strengthening economic recovery and a possible Fed rate hike in the coming months. The headline unemployment fell to 4.7%. In other economic news, factory orders rose 1.9% in April. ISM non-manufacturing came in at 52.9 for May, well below April's 55.7 print.  The final Markit services PMI was 51.3 in May, down from 52.8 in April and well below the post-crisis average of 55.6.

2-year treasury yield fell to 0.77%, its lowest since May 16, and the 10-year yield dipped below 1.70% to hit its lowest since April 7. Dollar index fell 1.7% to 93.87 for its worst day since Dec. 3.

Gold surged $30 to $1243 an ounce.  Nymex oil fell 55 cents or 1.1% to $48.62 a barrel. The US rig count rose for the first time in 11 weeks.

European markets, except a 0.4% higher FTSE, fell 1%-1.7%. Latest Markit's composite PMI output for the euro zone came in at 53.1, up from April's 53.0, indicating economic growth remained subdued.

Earlier, data showed Markit Caixin China services PMI fell to 51.2 in May, from 51.8 in the previous month.

For the week, Dow lost 0.4% while S & P 500 and Nasdaq rose 0.1% and 0.2% respectively. In Europe FTSE, DAX and CAC lost 1%, 1.8% and 2.1% respectively. In Asia, Nikkei fell 1.1% but Hang Seng gained 1.8% and Shanghai surged 4.2% on speculation that MSCI could include China A-shares in its Emerging Market Index at its annual review, which will be held on June 15.

AT HOME

After gaining about half a percent in the initial trade, benchmark indices gave away all the gains through the session to end flat on Friday. Sensex was absolutely unchanged at 26843 while Nifty added 2 points to finish at 8221. BSE mid-cap and small-cap indices lost 0.1% and 0.4% respectively. BSE Telecom and Consumer Durable indices tumbled 2.6% and 1.8% respectively, becoming top losers among the sectoral indices while Bankex and Auto indices were the top gainers, up 0.8% and 0.4% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 1585 cr (including Rs 1385 cr Idea deal), 319 cr and 246 cr respectively. DIIs were net sellers to the tune of Rs 393 cr.

Rupee appreciated 4 paise to end at 67.25/$.

For the week, Sensex and Nifty gained 0.7% and 0.8% respectively.

OUTLOOK

Today morning, Nikkei is down nearly a percent and half on stronger Yen, other Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 20 points higher start for our market.

Readers would recall that ever since Nifty crossed 7980 hurdle, we had been working with major target of 8243, which is the 61.8% retracement level of the entire 9119-6826 fall.

The benchmark, on Friday, touched a high of 8262 before closing at 8221, achieving the target mentioned above and vindicating our view.

As we have been mentioning for past couple of days, a decisive crossover of 8243 is required for fresh upmove. 8336, the top made in October 2015, would be the immediate target in that case, followed by 8655, the top made in July 2015, which is also the 52-week high.

8130 continues to be immediate support on the hourly chart, which should serve as the stop loss for trading longs.

Fed Chair Yellen is schedule to speak before the World Affairs Council of Philadelphia today and markets would carefully listen to her speech for getting cues to next interest rate hike after Friday’s dismal jobs report.