9044 IS IMMEDIATE SUPPORT; 9281-9351 IMMEDIATE RESISTANCE ZONE

9044 IS IMMEDIATE SUPPORT; 9281-9351 IMMEDIATE RESISTANCE ZONE

WORLD MARKETS

On Friday, after falling more than a percent in the initial trade on the back of weak retail data and rising trade tensions between China and the U.S., US indices saw a sustained northward move to end with gains of 0.2%-0.8%. The turnaround followed better-than-expected data on U.S. consumer sentiment.

The University of Michigan’s consumer sentiment index unexpectedly rose in early May as U.S. fiscal stimulus measures “improved consumers’ finances and widespread price discounting boosted their buying attitudes.” On the flip side, U.S. monthly retail sales fell by a record 16.4% in April, more than the expected fall of 12.3%.

The Trump administration moved to block semiconductor shipments to Chinese company Huawei. On the other end, Hu Xijin, editor-in-chief of Chinese state-run publication Global Times, tweeted that China would “restrict or investigate” U.S. companies including Qualcomm, Cisco Systems and Apple if the U.S. takes further action to block Huawei’s supply chain.

Brent crude rose $1.14, or 3.7%, to $32.27 per barrel, while WTI settled up 5.9% at $29.52 as data showed demand for crude picking up in China.

Data earlier showed China’s industrial output rose 3.9% y-o-y in April, marking the first expansion this year and beating the expected rise of 1.5%. Retail sales, however, fell 7.5% in April.

In Europe, DAX and FTSE rose 1.2% and 1% respectively while CAC inched up 0.1%. Euro zone GDP plunged 3.8% q-o-q in the first three months of the year. German GDP shrank by 2.2% in the first quarter compared to the final three months of 2019, the sharpest quarterly decline for Europe’s largest economy since the financial crisis.

US indices fell 1.2%-2.6% with the S & P 500 notching its worst week since March. European markets tumbled 2.3%-6% while Asian markets saw cuts of 0.7%-1.8%. WTI crude however soared 20%, posting third week of gains.

AT HOME

After falling a percent in the morning, benchmark indices recouped all the losses later to end little changed. Sensex settled at 31097, down 25 points while Nifty lost 6 points to finish at 9136. BSE mid-cap and small-cap indices fell 0.3% and 0.2% respectively. BSE Telecom and Metal indices rose 1.8% and 1.6% respectively, becoming top gainers among the sectoral indices while Realty index and Bankex were the top losers, down 1.4% and 1.1% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 2388 cr, 620 cr and 319 cr respectively. DIIs were net buyers to the tune of Rs 1225 cr.

Rupee ended unchanged at 75.56/$.

For the week, Sensex and Nifty fell 1.7% and 1.2% respectively, extending the losing streak to second straight week.

India's exports fell by a record 60% to an all-time low of $10.3 bn in April. Imports shrank over 58%, leaving trade deficit at $6.8 bn.

In the fourth tranche of Aatmanirbhar Bharat package, Finance Minster, on Saturday, announced reform measures for civil aviation, coal, minerals, defence output, electricity distribution, and atomic energy sectors.

Measures announced in 5th and final tranche on Sunday included, increased funding under MNREGS, exclusion of debt default due to coronavirus pandemic under the Insolvency and Bankruptcy Code (IBC) and reform linked jump in states’ borrowing limits. In addition, a new public sector enterprise policy that will create a recharged disinvestment playbook and creation of new health infrastructure was also announced.

Government extended nationwide lockdown till 31st May but with considerable relaxation this time. States and Union Territories have been given the final power to delineate Red, Orange and Green zones.

OUTLOOK

Japan’s economy shrank at an annualized rate of 3.4% in January-March, marking the country’s second straight quarter of contraction, meeting the technical definition of a recession.

Today morning, Asian markets are trading with gains of upto half a percent and SGX Nifty is suggesting around 60 points lower start for our market.

In Friday's report we had said that, 9044, the low made on Tuesday, continued to be the next support while 9281-9351, the gap created by Thursday's gap-down opening, would act as immediate resistance zone.

Nifty, after touching a low of 9050, rebounded to end at 9136 but is set to open below 9100 today.

9044, the bottom made last week, which will also roughly coincide with the rising 34-DMA today, continues to be important immediate support to eye. Upon sustained trading below 9044, 8909 and 8822, the bottoms made on 21st and 16th April respectively, would be the subsequent supports to eye.

On the way up, 9281-9351, the gap created by Thursday's gap-down opening, continues to be immediate resistance zone, upon crossover of which, 9584, the top made last week, would be the bigger hurdle to eye.  

Bharti Airtel will report its quarterly earnings today.