10607 IS THE IMMEDIATE HURDLE; 10300 IMMEDIATE SUPPORT

10607 IS THE IMMEDIATE HURDLE; 10300 IMMEDIATE SUPPORT

WORLD MARKETS

US indices ended with cuts of 0.4%-1% after a volatile session after digesting strong jobs report and different comments and reports on US-China trade war, while Apple shares dented the broader tech sector.

Stocks initially surged after the Labor Department said the U.S. economy added 250,000 jobs last month, as against an expected figure of 190000. Wages, meanwhile, rose 3.1% on an annualized basis in October for the first time since the recession.

The fall came after Larry Kudlow, Trump's top economic advisor, in a media interaction said there is no trade plan in the works for China. These comments contradicted a Bloomberg report from earlier on Friday that said Trump had asked officials to prepare a draft for a U.S.-China trade deal.

However, indices later on pared some of their losses after Trump told reporters the U.S. and China are much closer to striking a deal on trade, saying the two countries will have a good deal in place.

Apple plunged 6.6% after the company's iPhone shipments for last quarter missed estimates. The company also offered light guidance and announced major changes to its reporting structure.

US treasury yields rose following the jobs data. The benchmark 10-year note yield traded around 3.21% percent while the two-year yield climbed to 2.91% and hit its highest level in a decade.

US oil fell 55 cents to $63.14 after the United States said it will temporarily spare eight jurisdictions from Iran-related sanctions. Brent rose 2 cents to $72.91 a barrel.

European markets, except 0.3% lower FTSE, gained 0.3%-1.1%. Euro zone factory output grew at the weakest pace in more than two years in October, due to lower export orders.

For the week, Dow and S & P 500 gained 2.4% each while Nasdaq broke 4-week losing streak to end higher by 2.6%. European markets gained 2.2%-2.8%, with CAC breaking 5-week losing streak. In Asia, Hang Seng and Nikkei soared 7.2% and 5% respectively while Shanghai rose 3%.

AT HOME

Benchmark indices soared 1.7% to end at the highest level since 16th October, 2018. Sensex settled at 35011, up 580 points while Nifty added 172 points to finish at 10553. BSE mid-cap and small-cap indices however underperformed today, rising 0.8% each. BSE Auto and Metal indices climbed 4% and 3% respectively, becoming top gainers among the sectoral indices while IT and Teck indices were the top losers, down 1.3% and 1% respectively.

FIIs net sold stocks worth Rs 197 cr but net bought index futures and stock futures worth Rs 1381 cr and 446 cr respectively. DIIs were net buyers to the tune of Rs 853 cr.

Rupee appreciated 101 paise to end at 72.44/$.

For the week, Sensex and Nifty soared 5% and 5.2% respectively, registering the highest weekly gain in 29 months.

Axis Bank reported better-than-expected earnings and improvement in asset quality. NII was up 15% at Rs 5232 cr while Net profit soared 82.6% to Rs 790 cr. Gross NPA ratio improved 56 bps q-o-q to 5.96% and net NPA ratio fell 55 bps to 2.54%. Slippages fell to a ten quarter low at Rs 2777 cr from 4337 cr in Q1.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.6%-1.8% and SGX Nifty is suggesting about 40 points lower start for our market.

In Friday's report we had said that Above 10440, 10480, the two-third retracement level of the 10710-10004 fall, would be the immediate target above which, 10710, the top made in mid-October, would be the next crucial hurdle. We had also advised holding on to long positions with the stop-loss of 10220.

Nifty opened at 10480 and surged all the way to 10607 before closing at 10553 on Friday and is set to open around 10500 today.

10607, the top made Friday, roughly coincides with 34-DMA as well as the upper band of bollinger on the daily chart, hence making it an important immediate hurdle, a crossover of which is required for a fresh upmove. If that happens, 10710-10765 would be the next crucial resistance zone where 10710 is the top made in mid-October while 10765 is where 200-DMA is placed.

Immediate support on the hourly chart has moved up to 10300, with the stop-loss of which, existing long can be held on to.

SBI and Cipla will report their quarterly earnings today.