10770 IS THE NEXT HURDLE; 10550 SUPPORT

10770 IS THE NEXT HURDLE; 10550 SUPPORT

WORLD MARKETS

US indices gained 0.7%-1.4%.

Financials were be biggest contributors to the gains as the benchmark 10-year Treasury note yield rose to 2.98%, following yields in Europe after the European Central Bank hinted at winding down its asset-purchasing program

ECB's chief economist, Peter Praet said that underlying strength in the euro area economy was making the central bank confident that inflation will move toward target, adding that the institution would next week discuss how it will wind down its 30 billion euro (about $35 billion) monthly-purchase program.

Euro strengthened and European bonds sold off on these comments.

European market, except a marginally lower CAC, gained 0.3%-1%. New Italian Prime Minister Giuseppe Conte presented his coalition's plans to crackdown on immigration and up welfare spending while cutting taxes on Tuesday.

WTI oil fell 1.2% to $64.73 after surprise jump in US crude inventories.

AT HOME

Benchmark indices gained about eight tenth of a percent to break three-day losing streak. Sensex added 275 points to settle at 35178 while Nifty finished at 10684, up 91 points. BSE mid-cap and small-cap indices gained 1.3% and 1.5% respectively. All the BSE sectoral indices ended in green with Telecom and Consumer Durable indices leading the tally, up 3% and 2.3% respectively.

FIIs net sold stocks and index futures worth Rs 81 cr and 491 cr respectively but net bought stock futures worth Rs 314 cr. DIIs were net buyers to the tune of Rs 712 cr.

Rupee appreciated 23 paise to end at 66.91/$.

Monetary policy committee voted unanimously to increase the benchmark repo rate by 25 bps to 6.25%, marking the first rate hike in more than four years.  The MPC however, maintained its stance as ‘neutral'. The committee raised its forecast on consumer inflation for the first half of ongoing fiscal year to 4.8-4.9%, from the 4.4-4.7% forecast earlier. For the second half, the forecast was upped to 4.7% from 4.4%. FY19 GDP growth forecast has been maintained at 7.4%.

Union Cabinet okayed a Rs 8,000 crore bailout package for sugar sector under which a minimum selling price of Rs 29 per kg has been fixed for sugar. The government will also create 30 lakh mt buffer of sugar stock to balance demand and supply mismatch.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.2%-0.9% and SGX Nifty is suggesting about 40 points higher start for our market.

In yesterday's report we had mentioned that 10550 is the immediate support and

10690 is the immediate resistance above which 10770, the top made last week, would be the bigger hurdle to eye.

Yesterday, Nifty, after touching a high of 10698, closed at 10684 and is set to open above 10700 today.

10770, the top made last week, continues to be upside target as well as resistance to eye. Above 10770, 10875, where a trendline adjoining tops made in January and May is placed, would be the next hurdle to eye.

10550 continues to be important immediate support.