9104 BELOW 9390; 9889 IS IMMEDIATE HURDLE

9104 BELOW 9390; 9889 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices nosedived 2.6%-3.2% on Friday as technology shares slipped and U.S. President Trump threatened to impose retaliatory tariffs on China over the coronavirus pandemic.

White House economic advisor Larry Kudlow said that the Chinese will be held accountable for the coronavirus. Those comments came after President Trump told reporters he suspects the virus came from a lab in China.

Amazon tumbled 7.6% after first-quarter profit missed expectations and company said that it will spend all its second-quarter profits on its coronavirus response. Apple fell 1.6% as quarterly earnings topped expectations, but revenue growth remained flat y-o-y. It also did not offer guidance for the quarter ending in June amid uncertainty over the coronavirus outbreak.

WTI crude jumped 5%, or 94 cents, to settle at $19.78 per barrel, while Brent futures for July eased 7 cents, or 0.6%, to $26.31. Data showed U.S. energy firms cut oil rigs for a seventh week in a row, bringing the total count down to 325, the lowest since June 2016,

In Europe, FTSE fell 2.3% while markets in Germany, France, Italy and other major European economies were closed for Labor Day. The final U.K. Markit manufacturing PMI slumped to 32.6 from 47.0 in March, marking the worst decline in output for three decades in April.

Earlier, on Thursday, Dow and S & P 500 fell nearly a percent after data showed that another 3.8 million Americans filed for unemploymet last week and personal spending tumbled 7.5% in March, the biggest decline on record. All that came a day after figures showed US GDP fell 4.8% in the first quarter, marking the first negative GDP reading since the 1.1% decline in the first quarter of 2014 and the lowest level since the 8.4% plunge in Q4 of 2008 during the worst of the financial crisis.

AT HOME

It was a solid finish to the already strong week as well as month as benchmark indices soared 3%, extending the winning streak to fourth straight day and closing at the fresh highest level in 1-1/2 months. Sensex settled at 33717, up 997 points while Nifty added 306 points to finish at 9859. BSE mid-cap and small-cap indices gained 1.5% and 1.2% respectively. Except 0.6% and 0.1% lower Healthcare and FMCG indices respectively, all the BSE sectoral indices ended in green with Metal and Auto indices leading the tally, up 8.3% and 6% respectively.

FIIs net bought stocks and stock futures worth Rs 1969 cr and 2342 cr respectively but net sold index futures worth Rs 294 cr. DIIs were net buyers to the tune of Rs 579 cr.

Rupee appreciated 57 paise to end at 75.11/$.

For the week, Sensex and Nifty climbed 7.6% and 7.7% respectively. For the month of April, gains stood at 14.4% and 14.7% respectively, the highest in 11 years.

The Centre on Friday extended the nationwide lockdown by another two weeks, but with significant easing of curbs intended to reopen the country and restart economic activity even in the red zones, leaving only containment areas under strict restrictions.

Reports on Friday suggested GST collections for the month of March, recorded in April stood at Rs 32,174 cr.

Reliance Industries reported net profit before exceptional items of Rs 10813 cr. EBITDA fell 3.7% q-o-q to Rs 21782 cr while margin rose 120 bps to 16%. Petchem EBIT fell 18% q-o-q to Rs 5938 cr while EBIT margin fell to 18.4% from 19.6%. Refining EBIT fell 2.8% to Rs 6614 cr while EBIT margin rose to 7.8% from 6.6%. Retail EBIT rose 33% to Rs 2556 cr while margin improved to 7% from 5.2%. Gross Refining Margin stood at $8.9/bbl vs estimate of $7.80/bbl. The company approved rights issue for upto Rs 53125 cr at Rs 1257/share and said it will become net debt free ahead of March 2021 timeline.

HUL Q4 numbers declined on all fronts on a yearly basis as spread of COVID19 impacted the business from mid-March. Volume degrew by 7% as against expectation of 0-2% growth. Tech Mahindra's quarterly numbers too were below estimates on all fronts.

April auto sales, as expected, were a whitewash. Maruti Suzuki and M & M reported zero domestic sales while exported 632 and 733 units respectively. Escorts sold 705 units as against 5264 units y-o-y. Volvo Eicher sold 85 units vs 3961 units while Royal Enfield sold 91 units vs 62879 units.

OUTLOOK

Today morning, Asian markets are trading with cuts of 3%-4%. SGX Nifty is trading around 9350, suggesting a hefty 500 points lower start when compared to Thursday's close of Nifty future.

In Friday's report we had said that 9675, where an upwards sloping trendline adjoining recent tops on daily chart was placed, was the immediate target/resistance, upon crossover of which, 9970, the 50% retracement level of the entire 12430-7511 fall, would be the next major target/resistance to eye.

Nifty opened above the 9675 hurdle and surged all the way to 9889 before closing at 9860 and is set to open below 9400 today.

9390, the erstwhile resistance, would now be the immediate support to eye. If Nifty sustains below this support, 9104, the 33% retracement level of the entire 7511-9889 upmove, would be the next support. IF 9104 also gives way, 8909, the bottom made on 21st April, would be the next important support.

9889, the top made last week, would now act as immediate hurdle.