12400 CONTINUES TO BE UPSIDE TARGET; 12230 CONTINUES TO BE IMMEDIATE SUPPORT

12400 CONTINUES TO BE UPSIDE TARGET; 12230 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS

US indices gained 0.1%-0.3% to hit fresh highs, but ended off the day high, as the U.S. and China signed a highly anticipated phase one trade agreement.

The U.S.-China trade agreement includes provisions to curb intellectual property theft along with forced technology transfers. It also increases Chinese purchases of U.S. products. However, the deal does not remove existing U.S. tariffs on Chinese imports and leaves questions as to how the terms of the agreement will be enforced.

Earlier, comments from White House economic advisor Larry Kudlow that the Trump administration would unveil more tax cuts later this year, also aided the sentiment.

Bank of America's quarterly results beat expectations as bond-trading revenue ripped higher. Goldman Sachs's revenue surpassed estimates. BlackRock, UnitedHealth and PNC Financial also posted quarterly earnings that beat analyst expectations.

Target shares dropped more than 6.5% after the retailer announced disappointing holiday same-store sales.

Brent futures fell 49 cents, or 0.8%, to $64.00 a barrel, while WTI crude fell 42 cents, or 0.7%, to settle at $57.81.

In Europe, FTSE rose 0.3% while DAX and CAC ended with modest cuts. German full year GDP growth figures showed that Europe’s largest economy grew by 0.6% in 2019, its weakest expansion rate for six years. U.K. inflation came in at 1.3% compared to an expected 1.5% in December, its weakest rate in three years.

AT HOME

After falling nearly two-third of a percent, benchmark indices recouped most of the losses in late noon trade to end lower by just a fifth of a percent. Sensex settled at 41872, down 80 points while Nifty lost 19 points to finish at 12343. BSE mid-cap and small-cap indices climbed 0.7% and 1% respectively. BSE Realty and Consumer Durables indices were the top gainers among the sectoral indices, rising 1.4% each while Bankex was the top loser, down 0.7%, followed by 0.3% lower Finance, Telecom and Energy indices.

FIIs net bought stocks worth Rs 280 cr but net sold index futures and stock futures worth Rs 910 cr and 881 cr respectively. DIIs were net sellers to the tune of Rs 648 cr.

Rupee appreciated 7 paise to end at 70.81/$.

India's trade deficit fell to $11.25 bn in December from $12.12 bn in November and $14.49 bn in December 2018. Exports shrank 1.8% to $27.36 bn, falling for the fifth straight month. Imports fell 8.83% to $38.61 billion.

OUTLOOK

Today morning, Asian markets are trading little changed and SGX Nifty is suggesting about 15 points lower start for our market.

At the risk of repeating, we had advised going long on Nifty after 12150 hurdle was taken out and have been advising holding on to long positions with a trailing stop-loss. On last count, we had given target zone of 12400-12430 and had advised trailing the stop-loss to 12230.

Yesterday, Nifty, after touching a low of 12278, rebounded to end at 12343 and is set to open modestly lower today.

12400, where an upward sloping trendline adjoining tops made in August 2018 and June 2019 is placed, continues to be the next target/resistance to eye. Above 12400, 12450, where an upward sloping trendline adjoining recent tops on daily chart is placed, would be the next target.

12230 continues to be immediate support, with the stop-loss of which, trading longs should be held on to.