9970 IS THE NEXT TARGET/HURDLE; TRAIL STOP-LOSS TO 9598

9970 IS THE NEXT TARGET/HURDLE; TRAIL STOP-LOSS TO 9598

WORLD MARKETS

Dow and S & P 500 gained 0.4% each while Nasdaq rose 0.7% as hopes of economic recovery outweighed US-China tensions and civil unrest.

ISM manufacturing index improved to 43.1 in May from an 11-year low of 41.5 in April and marking the first rise in four months, indicating that the worst of the economic downturn was behind as businesses reopen.

Tensions between US and China continued to be in focus. Media reports suggested that China asked state-owned firms to halt purchases of soybeans and pork from the U.S.

Meanwhile, protests continued throughout the U.S. following the police killing of George Floyd, an unarmed black man, last week. Mayors of major cities from Los Angeles to Philadelphia to Atlanta imposed curfews and at least 12 states, as well as Washington, D.C., activated National Guard troops.

US crude fell 5 cents, or 0.1%, to settle at $35.44 per barrel while Brent rose 48 cents, or 1.3%, to $38.32.

European market gained 1.4%-1.8%.

AT HOME

Benchmark indices jumped more than 2.5% each, extending the winning streak to fourth straight day and closing at the highest level since 30th April, 2020, marking a fresh one-month high. Sensex settled at 33303, up 879 points while Nifty added 245 points to finish at 9826. BSE mid-cap and small-cap indices climbed 2.6% and 3% respectively. All the BSE sectoral indices ended in green with Consumer Durables leading the tally, up 6.6%, followed by 3.9% higher Metal index.

FIIs net bought stocks and index futures worth Rs 1575 cr and 136 cr respectively but net sold stock futures worth Rs 351 cr. DIIs were net sellers to the tune of Rs 459 cr.

Rupee appreciated 7 paise to end at 75.54/$.

India May manufacturing PMI came in at 30.8 Vs 27.1 in April.

IMD (India Meteorological Department) today said that India as a whole would receive 102 per cent rainfall of its Long Period Average(LPA) of 88 centimetres during the current monsoon season.

Hero Motocorp May sales stood at 1.12 lk units. TVS Motors sold 58900 units. Eicher Motors' Royal Enefield sales fell 69% y-o-y to 19113 units. Ashok Leyland sales fell 89% to 1420 units. Maruti reported 86% y-o-y dip May sales at 18539 units. Escorts reported 3.4% dip at 6594 units. M & M tractor sales fell 1% y-o-y to 24341 units while Auto sales plunged 79% to 9560 units.

Rating agency Moody's downgraded India’s sovereign rating to Baa3, the lowest investment grade, and kept the outlook negative, citing growing risks of a prolonged period of slower growth amid rising debt and persistent stress in parts of the financial system.

OUTLOOK

Today morning, Nikkei and Hang Seng are up 1.1% and 0.4% respectively while Shanghai is little changed. SGX Nifty is suggesting around 30 points higher start for our market.

In yesterday's report we had said that 9731, the upper end of the gap created by gap-down opening on 4th May, was the next upside target, above which, 9889, the top made in April, would be the major target/resistance.

Nifty achieved 9731 target at the open itself and surged all the way to 9931 before closing at 9826.

9970, the 50% retracement level of the entire 12430-7511 fall, is the next important target/resistance to eye.

9598, the lower end of the gap created by yesterday's gap-up opening, would now act as immediate support, with the stop-loss of which, trading longs can be held on to.