8740 CONTINUES TO BE NEXT UPSIDE TARGET; 8460 IMMEDIATE SUPPORT

8740 CONTINUES TO BE NEXT UPSIDE TARGET; 8460 IMMEDIATE SUPPORT

WORLD MARKETS                             

Dow and S & P 500 ended marginally lower while Nasdaq rose 0.1% on Friday.

The first estimate of fourth-quarter GDP showed US economy expanded at a 1.9% annual rate, a sharp deceleration from the 3.5% growth pace logged in the third quarter. Durable goods orders fell 0.4% in December and consumer sentiment for January hit 98.5, above an estimate of 98.1.

Energy stocks were under pressure as WTI crude fell 1.13% to $53.17 and Chevron shares declined after the firm reported disappointing quarterly results.

European markes, except a 0.3% higher FTSE, lost 0.1%-0.6%. Autos stocks led the losers after Trump's hawkish remarks on trade tariffs for the sector.

For the week, US indices gained 1%-1.9%. In Europe, DAX soared 1.6% but FTSE and CAC lost 0.2% each. In Asia Shanghai and Hang Seng rose 1.2% and 2% respectively and Nikkei was up 1.7%.

Trump, on Friday, signed an executive order which suspends the arrival of refugees for at least 120 days and bars visas for travelers from seven Muslim majority countries for the next three months. The order however has met severe criticism from several countries.

AT HOME

Extending the upmove to fourth straight day, Sensex and Nifty gained 0.6% and 0.4% respectively on Friday to close at the highest level since 25th October and 30th October 2016, respectively. Sensex added 174 points to settle at 27882 while Nifty finished at 8641, up 38 points. BSE mid-cap and small-cap indices gained 0.6% and 0.5% respectively. Except a 1.5% and 0.5% lower FMCG and Realty indices respectively, all the BSE sectoral indices ended in green, with Telecom and Power indices leading the tally, up 2.5% and 2.1% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 212 cr, 586 cr and 71 cr respectively. DIIs were net buyers to the tune of Rs 483 cr.

Rupee appreciated 4 paise to end at 68.04/$.

For the week, Sensex and Nifty soared 3.1% and 3.5% respectively, registering the biggest weekly gain in 8-months.

ITC reported 5.7% rise in quarterly net profit at Rs 2650 cr. Total income grew 5% to Rs 13570 cr. EBIDTA rose 2.1% to Rs 3546 cr while margins contracted 7 bps to 26.1%. Cigarette revenue rose 2.2% to Rs 8288 cr.

L & T's consolidated net profit rose 39% y-o-y to Rs 972 cr while revenue rose 1.4% to Rs 26286 cr. Operating profit rose 18.7% to Rs 2522 cr and margin expanded by 140 bps to 9.6%. Order inflow stood at Rs 34885 cr, down 10% y-o-y but was better-than-expected. The company however slashed its full year revenue growth guidance to 10% from 12-15% earlier.

OUTLOOK

Today, markets in China, Singapore, Hong Kong, South Korea and Taiwan are shut for public holidays. Nikkei is down about 0.8% and SGX Nifty is suggesting about 40 points lower start for our market.

Readers would recall that after Nifty crossed 8440 hurdle decisively, we had given a target of 8560, which was the 61.8% retracement level of the entire 8970-7894 fall. After this target was also met, we had given next level of 8740, which was the top made in October 2016.

Nifty on Friday touched a high of 8673 and closed at 8641 and is set to open around 8600 today.

Looking at the steep run-up over past four sessions, some sort of consolidation/correction cannot be ruled out.

8740 continues to be immediate target on the way up. 8460, the erstwhile resistance, would now act as the support on the way down, with the stop-loss of which, trading longs should be held on to.

HDFC and Tech Mahindra will report their quarterly earnings today.