STAY SHORT WITH THE STOP-LOSS OF 10210

STAY SHORT WITH THE STOP-LOSS OF 10210

WORLD MARKETS

US indices plunged 1.2%-2.1% on Friday as disappointing earnings from key tech companies overshadowed strong economic data.

Amazon and Alphabet fell after earnings for both companies topped analyst estimates, but revenues fell short.

U.S. economy grew at a 3.5% rate in the third quarter, above a 3.4% estimate. Personal consumption expenditures (PCE) index, a key measure of inflation, increased by 1.6% last quarter. Consumer spending, which accounts for more than two-thirds of economic activity, surged by 4% in the third quarter, the fastest pace since the fourth quarter of 2014.

US oil rose 26 cents to $67.58 and Brent was up 72 cents at $77.61 a barrel.

European markets fell 0.6%-1.3%.

For the week, US indices fell 3%-3.9%. Main European markets fell ftse 1.6%-3.1%. In Asia, Nikkei nosedived 6%, Hang Seng fell 3.3% but Shanghai was up 2%.

US oil fell 2.2% and Brent fell nearly 3%.

AT HOME

Sensex and Nifty tumbled a percent on the last day of the week to close at the lowest level in 7 months. Sensex settled at 33349, down 340 points while Nifty lost 95 points to finish at 10030. Broader market however outperformed with mid-cap and small-cap index down just 0.1% and 0.04% respectively. BSE IT index and Bankex tumbled 2% each, becoming top losers among the sectoral indices while Telecom and Energy indices were the top gainers, up 0.6% each.

For the week, Sensex and Nifty fell 2.8% and 2.6% respectively, extending the losing streak to second consecutive week.

FIIs net sold stocks and index futures worth Rs 1357 cr and 147 cr respectively but net bought stock futures worth Rs  541 cr. DIIs were net buyers to the tune of Rs 1876 cr.

Rupee depreciated 18 paise to end at 73.45/$.

ICICI reported better-than-expected NII and Net profit along with improvement in asset quality. NII grew 12.4% y-o-y to Rs 6418 cr while net profit fell 56% to Rs 909 cr. Gross NPA ratio improved 27 bps q-o-q to 8.54% and net NPA ratio fell 54 bps to 3.65%.

ITC reported largely in-line with estimates earnings. Revenue rose 7.3% y-o-y to Rs 11273 cr, EBITDA was up 11.8% to Rs 4206 cr, margins rose 150 bps to 38% and net profit was up 11.9% to Rs 2955 cr. Cigarette revenue rose 10.4% to Rs 5026 cr while EBIT rose 8.7% to Rs 3579 cr.

Dr Reddy's was a big operational and bottomline beat. While revenue rose 7% to Rs 3798 cr, EBIDTA climbed 25.5% to Rs 864 cr, margins were up 340 bps at 22.8% and net profit soared 77% to Rs 504 cr.

OUTLOOK

Today morning, Nikkei and Hang Seng are up 0.8% and 0.6% respectively but Shanghai is off half a percent. SGX Nifty is suggesting about 50 points higher start for our market.

After Nifty breached 10138 support, we have been working with next downside target of 9951, the bottom made in March. Nifty, on Friday touched a low of 10004 before closing at 10030 and is set to open around 10100 today.

9951 continues to be immediate support below which 9687, the bottom made in March, would be the next downside target.

10210 is the immediate hurdle on the hourly chart above which 10408, the top made last week, would be the bigger hurdle to eye.

Traders are advised to hold short positions with the stop-loss of 10210.