MARKETS SET TO CHEER EXIT POLLS WITH A GAP-UP; TRAIL STOP-LOSS TO 11426

MARKETS SET TO CHEER EXIT POLLS WITH A GAP-UP; TRAIL STOP-LOSS TO 11426

WORLD MARKETS

US indices fell 0.4%-1% on Friday on reports that trade talks between China and the U.S. have stalled.

Media reports suggested that scheduling discussions for further trade talks have been put on hold since the Trump administration has increased scrutiny of Chinese telecom companies.

Deere shares fell more than 7.5% after reporting weaker-than-expected earnings. The company cited the ongoing trade war for their disappointing results.

US oil fell 11 cents to $62.76 a barrel while Brent fell 41 cents to $72.21.

The Shanghai Composite dropped 2.5% and posted its longest weekly losing streak since July 2018.

European markets fell 0.1%-0.6%. Sterling fell to its lowest in four months after Brexit talks between the U.K. Conservative government and main opposition Labour Party broke down. Meanwhile, the Trump administration confirmed that it will delay tariffs on European auto imports for up to six months, which EU finance chiefs dubbed a “wise decision.”

AT HOME

Bulls extended the lead as benchmark indices soared a percent and fourth ahead of the last phase to 2019 general election. Sensex added 537 points to settle at 37930 while Nifty finished at 11407, up 150 points. BSE mid-cap and small-cap indices gained 1.1% and 0.5% respectively. BSE Auto and FMCG indices soared 2.4% and 2.3% respectively, becoming top gainers among the sectoral indices while Healthcare and IT indices were the top losers, down 1% and 0.8% respectively.

FIIs net sold stocks worth Rs 1058 cr but net bought index futures and stock futures worth Rs 311 cr and 592 cr respectively. DIIs were net buyers to the tune of Rs 1810 cr.

Rupee depreciated 19 paise to end at 70.22/$.

For the week, Sensex and Nifty gained 1.2% and 1.1% respectively.

OUTLOOK

Most exit polls, released yesterday evening, have predicated a clear majority to BJP-led NDA with nearly or above 300 seats, out of total 542 Lok Sabha seats. Meanwhile, reports over the weekend suggested that Alphabet’s Google has suspended some business with Chinese telecommunications giant Huawei.

Today morning, Nikkei is up about half a percent while Shanghai and Hang Seng are off 0.5% and 0.1% respectively. SGX Nifty is suggesting more than 200 points higher opening for our market.

In Friday's report we had mentioned that upon crossover of 11320-11350 resistance zone, 20-DMA, placed around 11500, would be the next target.

Nifty crossed this resistance zone and surged all the way to 11426 before closing at 11407 and is set to open above 11600 today.

11650, where a trendline adjoining recent tops on the daily chart is placed, is the next target/resistance to eye. Once that is taken out decisively, 11856, the top made last month, would be the next target.

11426, the top made on Friday, which would also be the lower end of the gap created by today's gap-up opening, would now serve as immediate support, with the stop-loss of which, existing longs can be held on to.

Tata Motors will report its quarterly earnings today.