STAY SHORT WITH THE STOP LOSS OF 11117

STAY SHORT WITH THE STOP LOSS OF 11117

WORLD MARKETS

While Dow gained 0.1%, S & P 500 and Nasdaq fell 0.1% and 0.4% respectively after a choppy session on worries over rising interest rates.

The yield on the 30-year treasury bond crossed the 3% level for the first time since May while the 10-year yield rose as high as 2.792% April 2014.

US fourth quarter productivity fell 0.1% as against expectation of a 0.1% gain.

Oil prices rose with Brent up 1.1% at $69.65 a barrel.

European markets fell 0.5%-1.5%. Eurozone IHS manufacturing PMI came in at 59.6, slightly lower than December's record high of 60.6.

AT HOME

Benchmark indices ended with modest cut after the usual budget day volatility. Sensex settled at 35907, down 58 points while Nifty lost 11 points to finish at 11017. BSE mid-cap index fell 0.5% while small-cap index ended flat. BSE Capital goods and Auto indices gained 1.6% and 0.7% respectively, becoming top gainers among sectoral indices while Consumer Durable and Energy indices tumbled 1.8% and 1.6% respectively, becoming top losers.

Finance Minister Arun Jaitley presented last budget before the 2019 Lok Sabha election and as expected, it turned out to be a rural, infra and agri focused budget.

The budget pegged fiscal deficit for FY19 at 3.3% and revised the same for FY18 to 3.5%. Another important highlight was the introduction of capital gains tax of 10% on equities held for a year or more, which till now was tax exempt. Dividend from equity oriented mutual funds will be taxed at 10%. Corporate Tax of 25% has been extended to companies with turnover up to Rs 250 cr

Talking about the farm sector, budget assured kharif MSP at 1.5 times produce price. Agriculture market fund of Rs 2000 cr was created and allocation for food processing sector. Rs. 10000 cr was allocated for animal husbandry, fisheries and aquaculture.  

On the rural front, government will spend Rs 14.34 lakh cr. for creation of livelihood in rural areas. 16000 cr will be spent for providing power to 4 cr poor households. 2 cr toilets will be built in next fiscal under Swachh Bharat Mission. Also 8 cr poor women instead of 5 cr will get new LPT connections. Also Rs 9975 cr have been allocated for social security schemes. Keeping poors in mind budget has proposed Rs 5 lakh medical insurance cover per year for 10 crore families.

On the personal income tax front no change was made in tax slabs. For salaried class, a standard deduction of Rs 40000 has been introduced in lieu of travel and medical expenses.

Customs Duty on sunglasses, cigarette lighter, toys, bus and truck tyres, select furniture, mobile phones and televisions. Customs duty on crude edible vegetable oils like groundnut oil, safflower seed oil has been hiked from 12.5% to 30%; on refined edible vegetable oil same is hiked from 20% to 35%. Customs duty on imitation jewellery has been hiked from 15% to 20%; doubled on all watches to 20%. Import duty on LCD/LED/OLED panels, parts of TVs has been hiked to 15%; duty on smart watches, wearable devices, footwear doubled to 20%.

FIIs net bought stocks and stock futures worth Rs 1100 cr and 753 cr respectively but net sold index future worth Rs 169 cr. DIIs were net sellers to the tune of Rs 358 cr.

Rupee depreciated 43 paise to end at 64.01/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.5%-1.4% and SGX Nifty is suggesting about 130 points lower start for our market.

We had turned our view negative since immediate support of 11040 was taken out. In yesterday's report also we had reiterated downside target of 10950 below which next downside level of 10800 was predicted.

Yesterday, after touching a low of 10878, Nifty rebounded to close at 11017 but is set to open below 10900 today.

10878, the bottom made yesterday, is the immediate support, below which 10800 would be the next downside target. 11116, the intraday high made yesterday, is the immediate hurdle, with the stop-loss of which, trading shorts should be held on to.

Hindalco and Bajaj auto will report their quarterly earnings today.