10440 CONTINUES TO BE NEXT SUPPORT; 10680 IMMEDIATE HURDLE

10440 CONTINUES TO BE NEXT SUPPORT; 10680 IMMEDIATE HURDLE

WORLD MARKETS

US indices fell 0.2%-0.7% with the Dow falling the most on the back of U.S. President Donald Trump's remarks that he was "not satisfied" with the latest round of trade talks with China.

This was despite China's announcement that it would reduce tariffs on some vehicles to 15% from as much as 25% while levies on some parts will be brought down to 6% effective July 1.

On the geopolitical front, Trump said there was a "substantial chance" that a summit with North Korean leader Kim Jong Un "may not work out."

European markets gained upto 0.7% with Auto stocks gaining the most on China tariff cut news.

AT HOME

Benchmark indices ended with modest gains after a rangebound but choppy trade, breaking five-day losing streak. Sensex settled 35 points higher at 34651 while Nifty finished at 10537, up 20 points. BSE mid-cap and small-cap indices gained 0.6% each. BSE Auto and Metal indices gained 1.7% and 1.6% respectively, becoming top gainers among the sectoral indices while Oil & Gas and Energy indices were the top losers, down 0.4% and 0.3% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1652 cr, 808 cr and 20 cr respectively. DIIs were net buyers to the tune of Rs 1497 cr.

Rupee appreciated 7 paise to end at 68.05/$.

SBI reported a net loss of Rs 7718 cr for the March quarter, mainly due to a surge in provisions which surged to Rs 28096 cr, up 49% q-o-q. Gross NPA ratio rose 56 bps q-o-q to 10.91% and Net NPA ratio rose 12 bps to 5.73%. NII fell 5.2% to Rs 19974 cr. The bank reported fresh slippages of Rs 33670 cr, up from Rs 25836 cr q-o-q.

The stock however surged nearly 4% after the bank’s chairman, Rajnish Kumar, said the worst on bad loans was behind. Also, there was a sharp fall in overall stressed assets (watch list, net NPA, etc) to 6.7% of advances in Q4 from 8.5% in the December quarter (Q3) with no outstanding in various restructuring buckets such as SDR and S4A.

Cipla missed estimates on all counts. The company posted a net profit of Rs 153 cr as against a loss of Rs 63 cr in same quarter last year. Revenue rose 3.2% to Rs 3698 cr. EBIDTA grew 10.2% to Rs 558 cr and operating margin expanded 100 bps to 15.1%.

Dr Reddy 3.3% y-o-y dip in March quarter net profit at Rs 302 cr while revenue fell 0.5% to Rs 3535 cr. EBIDTA was down 8.3% at Rs 578 cr and margin contracted 140 bps to 16.3%.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.3%-0.8% and SGX Nifty is suggesting about 20 points lower start for our market.

Readers would recall that we had turned our bias negative ever since immediate support of 10760 was broken. On the last count, after 10555-10600 support zone was taken out, we had given next downside target of 10440, which is the 50% retracement level of the entire 9951-10930 upmove.

Yesterday, Nifty, after touching a low of 10490, rebounded to end at 10536 and is set to open marginally lower today.

10440 continues to be immediate downside target as well as support to eye.

Immediate resistance on the hourly chart has moved lower to 10680, with the stop-loss of which, trading shorts should be held on to.

Tata Motors will report its quarterly earnings today.