NIFTY ACHIEVES 10440 TARGET; TRAIL STOP-LOSS TO 10575
US indices reversed first half losses to end with gains of 0.2%-0.6% after minutes of the May Fed meeting showed the Federal Reserve is comfortable letting inflation temporarily run above its inflation target.
Specifically, the minutes said "a temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective."
The lower start was attributed to retail giant Target reporting earnings that missed expectations and uncertainty over trade talks with China after Trump said the current dealmaking may be "too hard to get done."
General Electric plunged 7.2% — its worst one-day performance since 2009— after chief executive John Flannery said he expects no profit growth this year in its already stagnant power business.
The yield on the benchmark 10-year Treasury note fell to 3.008%. The dollar index was up 0.5% at 94.11.
European markets tumbled 1.1%-1.5% amid Italian government uncertainty and uncertainty over ongoing trade talks between US and China.
Euro zone consumer confidence fell to 0.2 points in May from 0.3 points in the previous month.
Sensex and Nifty nosedived 0.9% and 1% respectively to close at the lowest level since 18th April and 11th April respectively. Sensex lost306 points to settle at 34345 while Nifty finished at 10430, down 106 points. BSE mid-cap and small-cap indices fell 0.2% and 0.5% respectively. Except 0.3% and 0.1% higher Consumer Durable and Capital Goods indices respectively, all the BSE sectoral indices ended in red with Metal and Oil & Gas indices leading the losses, down 3.9% and 3.4% respectively.
FIIs net sold stocks and index futures worth Rs 311 cr and 1740 cr respectively but net bought stock futures worth Rs 159 cr. DIIs were net buyers to the tune of Rs 790 cr.
Rupee depreciated 38 paise to end at 68.42/$, closing at the lowest level since Nov. 29, 2016, marking a near 18-month low.
Shares of oil marketing companies tumbled 4-8% on fears that the government may ask them to freeze prices as a temporary arrangement.
Vedanta fell after the Madras High Court directed the company to stop the construction of Unit II of its Sterlite copper plant in Thoothukudi in south Tamil Nadu.
Tata Motors earnings missed expectation as consolidated net profit fell 50% to Rs 2176 cr. Revenue rose 18% to Rs 91279 cr. EBIDTA rose 3.7% to Rs 11250 cr and margin contracted 180 bps to 12.3%. JLR margins fell 220 bps to 12.2% from 14.4%.
Today morning, Nikkei is down more than a percent while Hang Seng and Shanghai are down 0.1% each. SGX Nifty is suggesting about 20 points higher start for our market.
After Nifty broke the 10555-10600 support zone, we had given next downside target of 10440, which is the 50% retracement level of the entire 9951-10930 upmove. Nifty yesterday plunged 106 points to end at 10430, achieving this target and vindicating our view.
Upon breach of 10417, which is the low made yesterday, next downside target to eye would be 10325, which is the 61.8% retracement level of the 9951-10930 upmove.
Meanwhile, immediate resistance on the hourly chart has moved lower to 10575, with the stop-loss of which, trading shorts can be held on to.
GAIL and United Spirits will report their quarterly earnings today.