16275 ABOVE FIRST-HOUR HIGH; 15858 IS IMMEDIATE SUPPORT

 

16275 ABOVE FIRST-HOUR HIGH; 15858 IS IMMEDIATE SUPPORT

 

WORLD MARKETS

 

US indices surged 1.8%-2.2% on Friday on hopes that the Fed would be less hawkish than feared at its upcoming policy meeting and in response to a new round of bank earnings and strong economic data.

 

Preliminary consumer sentiment and retail sales data beat expectations.

 

Citigroup soared 13.2% as quarterly profit beat estimates. Wells Fargo popped about 6.2% even as quarterly profits declined 48% and the bank set aside funds for bad loans.

 

Meanwhile, odds of a 100 bps rate hike in Fed meeting scheduled later in the month fell, after two of the most hawkish Fed officials on Thursday said they would prefer a 75 bps hike. Also, Atlanta Fed President on Friday cautioned against the central bank moving “too dramatically” because it could undermine the strong hiring and other positive trends still seen in the economy.

 

US 2-year treasury yield eased 1 bps to 3.128% while that of 10-year note fell 4 basis points to 2.921%. Dollar index fell 0.6% to 107.98. Gold fell a fifth of a percent to $1706.70 per ounce.

 

Oil prices rose after a U.S. official told Reuters that an immediate Saudi oil output boost was not expected, and as markets question whether OPEC has the room to significantly ramp up crude production. Brent crude futures were up $2.50, or 2.5%, to $101.60 a barrel while WTI crude rose $2.38, or 2.5%, to $98.16.

 

Data earlier showed China's second-quarter GDP grew 0.4% y-o-y, missing expectation of a 1% growth and marking the weakest print since the first quarter of 2020. 

 

European markets gained 1.7%-2.8%.

 

For the week, Dow slipped close to 0.2% while the S&P and Nasdaq fell 0.9% and 1.6%, respectively. In Europe, FTSE and DAX fell 0.5% and 1.2% respectively while CAC was little changed. In Asia, Nikkei inched up 0.4% while Hang Seng and Shanghai nosedived 6.6% and 3.8% respectively and Nifty was down 1.1%.

 

Dollar index, after hitting a high of 109.29, eased to end 1% higher at 107.98. Gold fell 2% for its fifth straight weekly loss. WTI and Brent crude fell 7% and 6% respectively

 

AT HOME

 

Benchmark indices rose two third of a percent, snapping a 4-day losing streak. Sensex settled at 53760, up 344 points while Nifty added 110 points to finish at 16049. Nifty mid-cap and small-cap indices rose 0.8% and 0.3% respectively. BSE Auto index climbed 2.3%, becoming top gainer among the sectoral indices, followed by 1.6% higher Consumer Durables index. Metal index was the top loser, down 1%, followed by 0.2% lower IT and Utilities indices.

 

FIIs net sold stock and index futures worth Rs 1649 cr and 457 cr respectively but net bought stock futures worth Rs 361 cr. DIIs were net buyers to the tune of Rs 1059 cr.

 

Rupee appreciated 2 paise to end at 79.86/$.

 

For the week, Sensex and Nifty fell 1.3% and 1% respectively, snapping a 3-week winning streak.

 

OUTLOOK

 

Nikkei is shut today while Hang Seng and Shanghai are up 0.8% and 0.5% respectively. SGX Nifty is suggesting around 140 points higher start for our market.

 

In Friday's report we had said that 20-DMA, placed around 15810, continued to be downside support to eye while 16100-16150 was the immediate resistance zone, with the stop-loss of which, trading shorts can be held on to.

 

Nifty rose to touch a high of 16066 before closing at 16049. The benchmark is set to open above 16150 today.

 

15858, the low made last week, coincided with a trendline adjoining recent bottoms on the daily chart. Also 20-DMA is placed around this level, which makes 15858 important immediate support; On the way up, first hour high would be important level to eye after likely gap-up opening; If Nifty is able to take out first hour high, 16275, the top made on 8th July, would be next upside level to eye.

 

For Banknifty, 35050 is the immediate hurdle on the way up, above which, 35543, the top made last week, would be the bigger resistance to eye; 34388, the lower end of the gap created by gap-up opening on 7th July, is the downside support.