10275 IS THE IMMEDIATE HURDLE; 10004 IMMEDIATE SUPPORT

10275 IS THE IMMEDIATE HURDLE; 10004 IMMEDIATE SUPPORT

WORLD MARKETS

After rising nearly a percent and half in the initial trade, Dow and S & P 500 nosedived nearly two and a half percent from the top to end lower by 1% and 0.7% respectively. Nasdaq tumbled more than three and a half percent from the top to end lower by 1.6%.

Media report suggested that the U.S. is planning on slapping tariffs on more Chinese products if upcoming talks between President Donald Trump and Chinese President Xi Jinping falter.

Amazon and Netflix extended previous day's fall by falling 6.3% and 5% respectively. These losses offset strong gains from bank shares.

Stocks had opened higher after IBM agreed to buy Red Hat, an open-source software distributor, for around $34 billion.

Dollar index rose about 0.4% to 96.70.

US oil fell 55 cents to $67.04 while Brent fell 8 cents to $77.54 a barrel.

European markets gained 0.4%-1.9%, reacting to news that China will announce a 50 percent cut in car purchase taxes and German Chancellor Angela Merkel plans to step down as party chairman.

AT HOME

After a marginally positive start, benchmark indices saw a sustained northward move through the session to end with mammoth gains of 2.2%. Sensex soared 718 points to settle at 34067 while Nifty finished at 10250, up 220 points. BSE mid-cap and small-cap indices gained 2.8% and 2.1% respectively. All the BSE sectoral indices ended in green with Healthcare and Realty indices leading the tally, up 4.2% and 3.8% respectively.

FIIs net sold stocks worth Rs 2231 cr but net bought index futures and stock futures worth Rs 279 cr and 2078 cr respectively. DIIs were net buyers to the tune of Rs 2527 cr.

Rupee appreciated 2 paise to end at 73.44/$.

BPCL was a miss on all the counts including net profit, margins and GRMs. Margins contracted 200 bps and GRMs stood at $5.57/bbl as against the expectation of $6.1/bbl.

Tata Power and Adani surged by 12.4% and 18.7% in today’s trade. The stocks surged as the Supreme Court directed Central Electricity Regulatory Commission (CERC) to take a call within eight weeks on whether or not to increase power tariffs for these companies' ultra mega power plant (UMPP) at Mundra.

These companies had entered into power purchasing agreement (PPA) with discoms to supply power at a fixed tariff. However, these companies had derived at such fixed tariffs by taking into account the cheaper coal which they sourced from Indonesia. However, Indonesia started levying extra taxes on supplying these coal and all the calculations to derive at the fixed tariff to supply power to discoms went for a toss. These plants are currently making hefty losses.  On account of this, Supreme Court has asked CERC to intervene and provide some relief to these plants. Provided CERC do provide some relief to these companies by increasing tariffs, then it will be very beneficial for these companies. Further, it will help these plants to not turn as non-performing asset and will be beneficial for the banks too who have exposure to these companies.

OUTLOOK

Today morning, Nikkei is up about a percent, Shanghai is flat while Hang Seng is off about half a percent. SGX Nifty is suggesting about 40 points lower start for our market.

In yesterday's report we had said that 10210 is the immediate hurdle on the hourly chart above which 10408, the top made last week, would be the next resistance to eye.

Nifty soared to touch a high of 10275 before closing at 10251 and is set to open around 10200 today.

10275, the top made yesterday, also coincides with the 38.2% retracement level of the recent 10710-1004 fall and hence is the immediate hurdle to eye. 10408-10440 would be the next resistance zone above 10275 where 10408 is the top made last week and 10440 is the 61.8% retracement level of the 10710-10004 fall.

10140 is the immediate support on the hourly chart below which 1004, the low made last week, would be the crucial support to eye.

Tech Mahindra and BoB will report their quarterly earnings today.