11180 CONTINUES TO BE NEXT HURDLE; 10930 IMMEDIATE SUPPORT

11180 CONTINUES TO BE NEXT HURDLE; 10930 IMMEDIATE SUPPORT

WORLD MARKETS

Dow and S & P 500 fell 0.9% each while Nasdaq slipped 1.2% on renewed worries over US-China trade talks.

White House economic advisor Larry Kudlow said China and the U.S. were still far away on striking a trade deal. Reports that a meeting between President Donald Trump and President Xi Jinping is highly unlikely, also weighed on the sentiment.

US crude fell $1.37 or 2.5% to $52.64 a barrel while Brent eased $1.05, or 1.7%, to $61.64.

European markets tumbled 1.1%-2.7%.  European Commission said euro zone growth will slow to 1.3% this year from 1.9% in 2018, before rebounding in 2020 to 1.6%.  In the U.K., the Bank of England cut its growth and inflation forecasts. The central bank projected the weakest economic outlook for the U.K. economy since 2009.

AT HOME

Benchmark indices ended little changed after a choppy session. Sensex settled at 36971, down 4 points while Nifty added 7 points to finish at 11069. BSE mid-cap and small-cap indices outperformed after a long time, rising 0.7% and 0.8% respectively. BSE Telecom and Healthcare indices climbed 2.5% and 1.5% respectively, becoming top gainers among the sectoral indices while Utilities and Energy indices were the top losers, down 0.9% and 0.8% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 418 cr, 999 cr and 473 cr respectively. DIIs were net buyers to the tune of Rs 294 cr.

Rupee appreciated 10 paise to end at 71.45/$.

Monetary Policy Committee cut its benchmark repo rate by 25 bps to 6.25% and also changed the policy stance to ‘neutral’ from ‘calibrated tightening’ and indicated that there may be scope of more rate cuts. This is the first rate cut announced by the MPC since August 2017. MPC cut its CPI forecast for Q4FY19 to 2.8%, for H1 FY20 to 3.2%-3.4% and for 3rd quarter FY20 to 3%. The MPC expects GDP growth in FY20 at 7.4%t compared to the 7.2% projected by the central statistical office for FY19.

Tata Motors' numbers were below estimates on all counts. Company posted a consolidated net loss of Rs 26961 cr, dented by a one-time loss of Rs 27838 cr on account of asset impairment in JLR, as against a profit of Rs 1215 cr in the same quarter last year. Adjusted Revenue rose 3.8% to Rs 77000 cr. Margin fell 300 bps to 8.5% and EBITDA was down 3.2% at Rs 6522 cr. JLR reported third consecutive quarter of loss at 3.1 bn pound. Margin fell 360 bps y-o-y and 170 bps q-o-q to 7.3%. Standalone numbers were in-line with estimates with profit at Rs 618, EBITDA at 1513 cr (up 43%) and margin at 9.3% (up 270 bps).

OUTLOOK

Today morning, Nikkei is down 1.4% and SGX Nifty is suggesting about 30 points lower start for our market.

After Nifty crossed 10985 hurdle, we had given upside targets of 11090 followed by 11180. Nifty achieved 11090 target yesterday and went all the way to 11118 from where it retreated to close at 11069 and is set to open around 11050 today.

11180, the 67% retracement level of the entire 11760-10004 fall, continues to be next upside target as well as resistance to eye.

Immediate support on the hourly chart has moved up to 10930, with the stop-loss of which, trading longs can be held on to.

Tata Steel, M & M and BPCL will report their quarterly earnings today.