10700, 10600 ARE THE DOWNSIDE SUPPORTS; 10955 IMMEDIATE HURDLE
US markets nosedived 2%-2.5% on Friday after stronger-than-expected jobs report sent interest rates higher. The Dow posted its worst day since June 2016. The S&P 500 and Nasdaq had their biggest one-day fall since September 2016 and August 2017, respectively.
The U.S. economy added 200,000 jobs in January as against the expected growth of 180,000. Wages rose 2.9% on an annualized basis. The benchmark 10-year yield rose to 2.85% on the back of the report, hitting a four-year high.
Exxon Mobil reported weaker-than-expected earnings while Tech giant Apple reported better-than-expected quarterly results but the stocks fell 4.4% on weaker-than-expected margin guidance. Alphabet tumbled 5.3% as earnings per share missing expectation. Amazon, meanwhile, surged to an all-time high on the back of its earnings report.
European markets fell 0.6%-1.8%.
US indices tumbled 1.5%-4.1%, snapping four-week winning streaks and also posting their worst weekly performance in two years. European markets fell 2.9%-4.2%. Asian markets lost 1.5%-2.8%.
Benchmark indices nosedived 2.3%, suffering the worst fall since 11th November 2016. Sensex settled at 35066, down 840 points while Nifty lost 256 points to finish at 10760. BSE mid-cap and small-cap indices collapsed 4% and 4.6% respectively. All the BSE sectoralindices ended in red with Realty index leading the losses, down 6.3%, followed by 4% lower Basic Material and Utilities indices.
FIIs net bought stocks and stock futures worth Rs 950 cr and 701 cr respectively but net sold index futures worth Rs 1988 cr. DIIs were net buyers to the tune of Rs 509 cr.
Rupee depreciated 4 paise to end at 64.0/$.
For the week, Sensex and Nifty lost 2.7% and 2.8% respectively, the highest weekly fall since the week ended 11th August 2017.
Bajaj Auto reported lower-than-expected 3% rise in December quarter net profit at Rs 952 cr. Revenue rose 26% to Rs 6369 cr. Operating profit rose 18% to Rs 1231 cr and margins contracted 130 bps to 19.3%.
Hindalco posted standalone profit growth of 17.2% y-o-y at Rs 375 cr hit by one-time loss of Rs 115 cr. Revenue rose 18.4% to Rs 11023 cr. Operating profit rose 10.7% to Rs 1312 crand margin contracted by 80 bps to 11.9%.
Today morning, Shanghai is down 0.6% while Hang Seng and Nikkei are down more than 2%. SGX Nifty is suggesting about 80 points lower start for our market.
Readers would recall that we have been negative on Nifty since 11040 support was broken and had advised hedging portfolios before the budget considering heady run-up since December bottom.
In Friday's report we had said that below 10878, the bottom made the budget day, 10800 would be the next downside target and had advised holding short positions with the stop-loss of 11116, the budget day high.
Nifty broke 10878 level and plunged all the way to 10736 before closing at 10760, vindicating our view.
A lower start today would take the benchmark around 10700, where important 34-DMA support is placed. Below 10700, 10600, the 50% retracement level of the 10033-11171 upmove since December bottom, will be the next important support to eye.
Meanwhile, 10955, the lower level of the gap created by the gap down opening on Friday, is the immediate hurdle on the hourly chart, with the stop-loss of which, trading shorts can be held on to. Also, some profit booking in short position is advised in 10700-10600 region.
Tata Motors and Colgate will report their quarterly earnings today.