ALL EYES ON RBI

ALL EYES ON RBI

WORLD MARKETS

US indices fell 0.4%-1% following a decline in some major tech stocks, along with dismal employment data and rising tensions with China.

US Secretary of State Mike Pompeo on Wednesday again criticized Beijing's handling of the outbreak and a Chinese official said the country will not flinch from any escalation in tensions.

Weekly jobless claims rose by another 2.4 million last week, bringing the total number of filings during the pandemic to more than 38 million.

Brent crude rose 31 cents, or 0.9%, to settle at $36.06 per barrel, while WTI gained 43 cents, or 1.3%, to $33.92 per barrel, both hitting their highest level since March.

European markets fell 0.7%-1.4%. Eurozone composite PMI came in considerably better-than-expected at 30.5 compared to April’s all-time low of 13.6. U.K. composite PMI came in at 28.9 versus April’s 13.8.

AT HOME

After rising more than a percent, benchmark indices saw a steep fall in late noon trade to end higher by just four tenth of a percent. Nevertheless, this was the third straight day of gains for both the main indices. Sensex settled at 30932, up 114 points while Nifty added 40 points to finish at 9106. BSE mid-cap and small-cap indices gained 0.8% and 0.7% respectively. BSE Auto and Consumer Discretionary Goods & Services indices climbed 2.4% and 2.1% respectively, becoming top gainers among the sectoral indices while Power and Capital Goods indices were the top losers, down 1.2% and 1% respectively.

FIIs net sold stocks and index futures worth Rs 259 cr and 471 cr respectively but net bought stock futures worth Rs 490 cr. DIIs were net buyers to the tune of Rs 402 cr.

Rupee appreciated 19 paise to end at at 75.60/$.

Bajaj Finserve reported 77% y-o-y fall in net profit at Rs 194.4 cr on account of Rs 900 cr Covid provision. Revenue rose 2.3% to Rs 13295 cr

Colgate's net profit came in slightly higher-than-expected but topline and operational performances missed estimates. Revenue fell 7.2% y-o-y to Rs 1070 cr, EBITDA was down 15.5% at Rs 262 cr, margin fell 240 bps to 24.5% while profit rose 3.3% to Rs 204 cr.

OUTLOOK

Today morning, Hang Seng is down 3% after China's parliament said it will introduce a proposal for a national security law in Hong Kong. Nikkei and Shanghai are down 0.2% and 0.6% respectively. SGX Nifty is suggesting about 30 points lower start for our market.

In yesterday's report we had reiterated the view that 9158, the top made on Monday, continued to be immediate hurdle, a crossover of which was required for a fresh upmove.

Nifty, after touching a high of 9178, slipped to end at 9100 and is set to open modestly lower today.

9178, the top made yesterday, is now the immediate hurdle, a crossover of which would confirm a "Buy" on the hourly chart and would pave the way for further upmove. 9281-9351, the gap created by gap-down opening on 14th May, would be the next target/resistance zone to eye if that happens.

8950 is where a trendline adjoining recent bottoms on hourly chart is placed, making it an immediate support. If 8950 gives way, 8806, the bottom made on Monday, would be the next support.

UPL will announce its quarterly results today.

RBI governor will hold a briefing at 10 am today and market is expecting announcements related to TLTRO (reduction in Repo and Reverse Repo rates) and Banking sector rules (NPA reclassification/extension of moratorium by 3-months).