11060 CONTINUES TO BE IMMEDIATE HURDLE; 10780 IMMEDIATE SUPPORT

11060 CONTINUES TO BE IMMEDIATE HURDLE; 10780 IMMEDIATE SUPPORT

WORLD MARKETS

US indices soared 1.2%-1.4%, with the S & P 500 and Nasdaq snapping six-day losing streak, after China’s central bank indicated it plans to keep its currency at a level stronger than markets had first feared, easing tensions about the nation using the yuan as a weapon in the trade war.

The People’s Bank of China (PBOC) denied Washington’s allegations of currency manipulation, and set its yuan fixing at 6.9683 per dollar, below the important line of 7 per dollar that it had breached on Monday.

Brent futures fell 58 cents to $59.23 a barrel while WTI eased 78 cents to $53.92.

European markets fell 0.1%-0.8%. Data from Germany showed new industrial orders increased 2.5% month-on-month in June, though were still down by 3.6% on the year. July construction PMI came in at 49.5, down from 50.0 in June and dipping into contraction territory for the first time since October 2018.

AT HOME

Benchmark indices ended with gains of eight tenth of a percent, registering best day since 25th June, 2019. Sensex added 277 points to settle at 36976 while Nifty finished at 10948, up 85 points. BSE mid-cap and small-cap indices soared 1.4% and 1.7% respectively, marking their best day since 20 June and 27th May respectively. BSE Capital Goods and Telecom indices soared 2.1% and 1.9% respectively, becoming top gainers among the sectoral indices while Energy index was the top loser, down 0.7%, followed by 0.2% lower IT and Teck indices.

FIIs net sold stocks and index futures worth Rs 2108 cr and 541 cr respectively but net bought stock futures worth Rs 689 cr. DIIs were net buyers to the tune of Rs 2289 cr.

Rupee depreciated 7 paise to end at 70.81/$.

Titan's net profit missed estimate while revenue, margin and EBITDA were in-line. Revenue rose 14.4% y-o-y to Rs 4940 cr, EBITDA was up 14.1% at Rs 565 cr, margin improved 10 bps to 11.5% and net profit rose 6.2% to Rs 371 cr.

OUTLOOK

Today, China has set the yuan midpoint at 6.9996 per dollar, which is slightly weaker-than-expected.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 50 points lower start for our market.

In yesterday's report we had reiterated that 10700, the 67% retracement level of the 10004-12103 upmove, is the next support to eye. We had also said that immediate resistance on the hourly chart has moved lower to 11060, with the stop-loss of which, trading shorts should be held on to.

Nifty, after touching a low of 10813 in the initial trade, rebounded sharply to touch a high of 11018 before closing at 10948 and is set to open around 10900 today.

10782, the bottom made on Monday, is the immediate support, upon breach of which 10700, the 67% retracement level of the entire 10004-12103 upmove, would be the next important support.

11060 continues to be immediate hurdle, a crossover of which is required to negate the near term negative view.

RBI's Monetary Policy Committee will announce its decision at the end of it's two day meeting today. A 25 bps rate cut is widely expected. The committee is also expected to maintain its "Accomodative" stance.

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