NIFTY RETREATS AFTER ACHIEVING 11695 TARGET

NIFTY RETREATS AFTER ACHIEVING 11695 TARGET

WORLD MARKETS

US indices fell 0.2%-0.7% after some disappointing earnings including McDonald's and Travelers.

McDonald’s fell 5% after earnings and revenue for the previous quarter that missed expectations. Travelers plunged more than 8% after reporting earnings that badly missed estimates. On the flip side, United Technologies and Procter & Gable rose more than 2% after their results topped expectations.

U.K. lawmakers voted to reject a limited time frame for reviewing legislation related to Britain’s withdrawal from the European Union. It now means that the U.K. is almost certainly not going to leave the U.K. on October 31— the current deadline, and the EU may provide an extension to prevent a no-deal Brexit occurring.

Brent oil settled 1% higher at $59.59 a barrel, while WTI crude gained 1.6% to settle at $54.16 per barrel following a report that OPEC and its allies would consider deeper production cuts when they meet in December.

In Europe, FTSE and CAC rose 0.7% and 0.2% respectively while DAX was little changed as U.K. lawmakers debated Prime Minister Boris Johnson’s EU Withdrawal Agreement Bill ahead of two crucial votes.

AT HOME

Sensex and Nifty slipped 0.8% and 0.6% respectively, breaking 6-day winning streak. Sensex settled at 38963, down 334 points while Nifty finished at 11588, down 73 points. BSE mid-cap index fell 0.1% while small-cap index gained 0.5%. BSE IT and Teck indices nosedived 7% and 6.3% respectively, becoming top loser among the sectoral indices, while Healthcare and Consumer Durable indices were the top gainers, up 1.6% and 1.5% respectively.

FIIs net sold stocks worth Rs 558 cr but net bought index futures and stock futures worth Rs 1328 cr and 318 cr respectively. DIIs were net sellers to the tune of Rs 985 cr.

Rupee appreciated 21 paise to end at 70.93/$.

Infosys tumbled after a whistleblower complaint alleged “unethical practices” by its top executives to boost company's profits and revenue.

Axis Bank reported a loss of Rs 112 cr due to a one-time tax impact of Rs 2138 cr. Excluding the extraordinary item, the bank's net profit would have jumped 157% y-o-y to Rs 2026 cr. NII rose 16.6% to Rs 3518 cr. Asset quality improved as Gross NPA ratio improved 22 bps q-o-q to 5.03% and net NPA ratio improved 5 bps to 1.99%. Slippages rose 3.8% q-o-q to Rs 4983 cr. Loan growth was strong.

Kotak Bank saw marginal rise in bad loans. Bajaj Finance saw over-dues rise across segments.

OUTLOOK

Today morning, Nikkei is up 0.2% while Hang Seng and Shanghai are marginally in the red. SGX Nifty is suggesting a flattish start for our market.

At the risk of repeating, we have been bullish on Nifty ever since 11325 hurdle was taken out on 9th October and have been advising holding on to long positions with a trailing stop-loss since then.

On last count, when Nifty took out 11630 hurdle, we had said that 11695, the top made in September, is the next target as well as resistance to eye.

Nifty yesterday touched a high of 11714, achieving 11695 target and vindicating our view. The benchmark however, could not sustain above it and slipped to end at 11588.

11695 continues to be important immediate hurdle, a decisive crossover of which is required for a fresh upmove. If that happens, 11772-11798, the gap created by a gap down opening on 8th July, would be the next target.

Meanwhile, immediate support on the hourly chart has moved up to 11490, with the stop-loss of which, existing longs can be held on to.

L & T, Bajaj Auto, Hero Motocorp and HCL Tech will report their quarterly earnings today.