NIFTY ACHIEVES 20,34 WEEK AVERAGE TARGET; TRAIL STOP-LOSS TO 8300

NIFTY ACHIEVES 20,34 WEEK AVERAGE TARGET; TRAIL STOP-LOSS TO 8300

WORLD MARKETS                             

While Dow ended flat, S & P 500 and Nasdaq gained 0.2% and 0.5% respectively on Friday, after digesting strong quarterly earnings from U.S. banks and several pieces of economic data.

JPMorgan Chase, Bank of America and PNC Financial all reported better-than-expected profits, but only JPMorgan exceeded revenue estimates. Wells Fargo disappointed slightly and posted a decrease in earnings.

U.S. wholesale prices rose 0.3% in December, led higher by more expensive gas, food and cars. The producer price index increased 1.6%. December retail sales rose 0.6%. December consumer sentiment came in slightly below estimates and business inventories rose 0.7% in November.

U.S. Treasuries fell with the benchmark 10-year note yield rising to 2.393%, while the two-year note yield advanced to 1.197%. The U.S. dollar rose slightly. Gold fell $4 to $1196 per ounce.

Earlier data from China showed exports dropped 6.1% and imports rose 3.1%, leaving a lower trade balance of USD 40.81 bn compared to 44.61 bn in previous month.

European markets climbed 0.6%-1.9%.

For the week, Dow and S & P 500 fell 0.4% and 0.1% respectively but Nasdaq was up 1%. FTSE soared 1.8% while DAX and CAC were up 0.3% each. In Asia, Hang Seng was up 1.9% but Nikkei and Shanghai lost 0.9% and 1.3% respectively.

AT HOME

Benchmark indices ended marginally lower after a rangebound but choppy trade, consolidating after hefty gains made in past three sessions. Sensex settled at 27238, down 9 points while Nifty lost 7 points to finish at 8400. BSE mid-cap and small-cap indices were also little changed. BSE IT and Teck indices tumbled 1.9% and 1.7% respectively, becoming top losers among the sectoral indices while FMCG index climbed 1.2%, becoming top gainer, followed by 0.6% higher Finance index.

FIIs net sold stocks and stock futures worth Rs 118 cr and 172 cr respectively but net bought index futures worth Rs 91 cr. DIIs were net sellers to the tune of Rs 474 cr.

Rupee depreciated 7 paise to end at 68.15/$.

For the week, Sensex and Nifty gained 1.8% and 1.9% respectively, extending the winning streak to third straight week.

Infosys delivered mixed set of earnings and lowered full year dollar as well as rupee revenue guidance. Dollar revenue slipped 1.4% q-o-q to USD 2531 mn and rupee revenue declined 0.2% to Rs 17273 cr. Dollar revenue in constant currency fell 0.3%. Net profit rose 2.8% to Rs 3708 cr. The company tightened its constant currency revenue guidance to 8.4-8.8% from 8-9% earlier. Full year dollar revenue guidance was lowered to 7.2-7.6% from 7.5-8.5% and rupee revenue guidance to 10-10.4% from 10.9-11.9%.

India's trade deficit narrowed to $10.3 billion in December from $13 bn in November as exports rose 5.7% y-o-y to $23.88 bn while imports remained flat at $34.25 bn.

Oil Marketing Companies hiked petrol and diesel price by 42 paise and Rs 1.03 per litre respectively.

To bring down the overall cost of transaction in the stock market, markets regulator Sebi on Saturday reduced its turnover fees by 25% to Rs 15 per Rs 1 crore worth of turnover from Rs 20 earlier. It also allowed mutual fund (MF) companies to invest in hybrid instruments such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The regulator, however, has put certain conditions on mutual funds for such investments.

OUTLOOK

British pound fell more than 1% to about $1.2043 after media reports suggested Prime Minister Theresa May's government was prepared to make a "hard" or "clean" exit from the European Union, ahead of her speech Tuesday.

Today morning Asian markets are trading with cuts of 0.3%-1% and SGX Nifty is suggesting about 25 points lower start for our market.

After Nifty achieved 8275 target, we had been working with next major target of 8400-8450 where 20 as well as 34-week moing averages were placed. The benchmark touched a high of 8461 before closing at 8400, achieving the targets mentioned above and vindicating our view.

8430-8440 is the region where these two averages are placed currently. A decisive crossover of this region would be required for a fresh upmove.

Meanwhile, immediate support on the hourly chart has moved up to 8300, with the stop-loss of which existing longs can be held on to.

Reliance Industries will report its quarterly earnings today. Net profit is expected to rise 1.9% q-o-q to Rs 7850 cr. Gross Refining Margins is expected at $11.5 per barrel, up from $10.10.

The GST Council will meet for the ninth time today with the issue of dual control being the single biggest issue on agenda. The council has been deadlocked in the last four meetings, the last one being on January 4, with states seeking sole powers to control assesses with annual turnover of up to Rs 1.5 crore. Centre, however, is not in favor of a horizontal split as it feels states do not have the expertise to administer levies like service tax. Jaitley is also not favour of dual agencies auditing and scrutinizing each taxpayer as he reckons multiple authorities could end up acting at cross-purposes.