10535 BELOW 10588; 10722-10747 CONTINUES TO BE RESISTANCE ZONE

10535 BELOW 10588; 10722-10747 CONTINUES TO BE RESISTANCE ZONE

WORLD MARKETS

US indices nosedived 2.2%-3% on Friday on the back of a weaker-than-expected jobs report and China-U.S. trade tensions.

The U.S. economy added 155,000 jobs last month, lower than the expected gain of 198,000 jobs. Wage growth also missed estimates.

Wall Street Journal reported federal prosecutors are expected to bring charges against Chinese hackers allegedly trying to break into technology service providers in the U.S.

US crude rose 2.2% to $52.61 and Brent rose 2.7% to $61.67 a barrel after OPEC, Russia and several other producers reached an agreement to cut output by 1.2 million bpd during the first six months of 2019.

European markets, except 0.2% lower DAX, gained 0.5%-1.1%.

For the week, US indices nosedived 4.5%-4.9%. European markets tumbled 2.9%-4.2%. In Asia, Nikkei and Hang Seng fell 3% and 1.7% respectively, while Shanghai rose 0.7%.

AT HOME

Sensex and Nifty soared 1% and 0.9% respectively, breaking three-day losing streak. Sensex settled at 35673, up 361 points while Nifty added 92 points to finish at 10693. Broader market however underperformed with 0.2% higher mid-cap index and 0.3% lower small-cap index. BSE Bankex and Finance indices climbed 1.7% and 1.1% respectively, becoming top gainers among the sectoral indices while Utilities and Oil & Gas indices were the top losers, down 1% and 0.6% respectively.

FIIs net sold stocks worth Rs 817 cr but net bought index futures and stock futures worth Rs 617 cr and 855 cr respectively. DIIs were net buyers to the tune of Rs 243 cr.

Rupee appreciated 10 paise to end at 70.80/$.

For the week, Sensex and Nifty fell 1.4% and 1.6% respectively.

Exit polls released on Friday predicted clear wins for the Congress in Rajasthan and TRS in Telangana and a hung assembly in Mizoram, but presented a confused picture/close contest in Madhya Pradesh and Chhattisgarh.

OUTLOOK

China's November exports rose 5.4% y-o-y, the weakest performance since March and below the 10% jump predicted by a Reuters poll. Import growth was 3%, the slowest since October 2016, and a fraction of the 14.5% expected.

U.S. Trade Representative Robert Lighthizer told in an interview on Sunday that the end of the 90-day pause in tariff escalation between Washington and Beijing in their trade war is a "hard deadline."

Today morning, Nikkei and Hang Seng are down 1.8% and 1% respectively while Shanghai is off 0.3%. SGX Nifty is suggesting about 110 points lower start for our market.

Readers would recall that we had turned our view negative after Nifty broke the immediate support of 10750, where 200-DMA was also placed. Nifty, after touching a low of 10588, which roughly coincided with the 38.2% retracement level of the entire 10004-10941 upmove, rebounded on Friday to end at 10693 but is set to open around the bottom made last week. We had also said on Friday, that, 10747-10722, the gap created by Thursday's gap down opening, would now act as the immediate hurdle, with the stop-loss of which, trading shorts can be held on to.

Below 10588, which is the bottom made last week, next important support to eye would be 34-DMA, which is placed around 10535. Below 10535, 10470, the 50% retracement level of the entire 10004-10941 upmove, would be the next support to eye.

10747-10722 continues to be immediate resistance zone, with the stop-loss of which, trading shorts should be held on to.