NIFTY RETREATS AFTER ACHIEVING 10070 TARGET

NIFTY RETREATS AFTER ACHIEVING 10070 TARGET

WORLD MARKETS                             

Dow gained 0.4% but S & P 500 and Nasdaq fell 0.1% and 0.6% yesterday as technology stocks reversed initial gains to end in red.

Facebook soared nearly 6% to a record before paring gains after reporting better-than-expected earnings, sales and monthly active user data.

Uncertainty about what tax reform might look like grew after House speaker Paul Ryan said in a statement that a border adjustment tax is now off the table.

Durable goods orders rose 6.5% in June and initial jobless claims came in at 244,000, slightly above the expected 240,000.

In Europe, FTSE and CAC fell 0.1% while DAX lost 0.8%. Gfk German consumer sentiment index rose to 10.8 in August, up from 10.6 in July.  

AT HOME

After gaining nearly a percent in the morning, benchmark indices plunged in the noon trade to give away all the gains and end absolutely flat, i.e. 32383 for Sensex and 10020 for Nifty. BSE mid-cap and small-cap indices ended with cuts of 0.6% and 0.5% respectively. BSE Telecom and IT indices tumbled 1.9% and 1.8% respectively to become top losers among sectoral indices while Finance index and Bankex were top gainers, up 1.4% and 0.8% respectively.

FIIs net bought stocks and index futrues worth Rs 1870 cr and 2097 cr respectively but net sold stock futures worth Rs 610 cr. DIIs were net sellers to the tune of Rs 660 cr.

Rupee appreciated 26 paise to end at 64.11/$.

Maruti reported Net profit and margins that were above market expectations while revenue was a beat.

HCL Tech reported in-line with expectation dollar revenue growth of 4% while operating margin at 20.1% was better-than-expected. The company maintained constant currency revenue growth guidance of 10.5-12.5% for current fiscal.

Dr Reddy reported revenue of Rs 3320 cr which was in-line but Net profit at Rs 66.6 cr and margin at 10.1% were a miss. The ADR plunged 8% after negative cues from concall.

ICICI Bank's net profit was above estimate while NII growth was slightly below estimate. While the watchlist went up by more than 1000 cr, slippages came at a 7-quarter low. Gross NPA ratio stood at 7.99%, up from 7.89% q-o-q.

ITC reported 4% revenue growth and 8% profit growth which were in-line with estimate. EBIDTA margin stood at 27.1%. Cigaratte revenuee rose 6.6% and volume were higher than expectation. FMCG and Hotel revenue rose 9% and 6% respectively.

ONGC reported net realisation or around 51/barrel. Margin at 46.3% and profit at Rs 3885 cr were lower-than-expected.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.2%-1% and SGX Nifty is suggesting about 70 points lower start for our market.

We had been working with the upside target of 10070 after 9928 hurdle was taken out.

Nifty yesterday touched a high of 10115 before slipping to close at 10020, achieving the above mentioned target and vindicating our view.

After a heady run-up of 5.4% in July derivative series, and achieving the first major upside target of 10000 that we had given in our special report published on 3rd April, 2017, there are chances of Nifty entering into a consolidation mode.

Immediate support on the hourly chart has moved up to 9960 but Nifty is likely to open below that. In that case, the bottom made during the first hour would be important, a breach of which would confirm a sell on the hourly chart and would pave the way for further correction. Next support would come around 9900, where a trendline adjoining major tops on hourly chart lands a support.

Traders are advised to cut long positions if first hour low is breached.

L & T will report its quarterly earnings today.