NIFTY AT CRUCIAL SUPPORT; 9860 IMMEDIATE HURDLE

NIFTY AT CRUCIAL SUPPORT; 9860 IMMEDIATE HURDLE

WORLD MARKETS                             

Dow and S & P 500 gained 0.1% each while Nasaq climbed 0.6% on Friday.

War of words between US and Korea continued with Trump's latest tweet "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!".

US Consumer Price Index edged up 0.1% last month, versus expectations of a 0.2% gain. The CPI rose 1.7% compared to the previous year, which was a tad below the 1.8% expected.

Gold gained $4 to $1294 per ounce, their highest since June.

European markets, except a flat DAX, plunged 1.1%-1.6%.

For the week, US indices fell 1.1%-1.5% with the Dow and S & P 500 registering their second worst of the year. European markets nosedived 2.3%-2.7%. Asian markets tumbled 1.1%-3.5% with India leading the losses.

Over the weekend, North Korea claimed that more than 3 million volunteers had offered to join its army.

AT HOME

Mayhem was extended to fifth straight session as benchmark indices plunged a percent to close at nearly five-week low. Sensex slumped 318 points to settle at 31214 while Nifty finished at 9711, down 109 points. BSE mid-cap and small-cap indices however fell less at 0.2% and 0.04% respectively. BSE Metal index plunged 3.6%, becoming top loser among the sectoral indices, followed by 1.5% lower Auto index. Consumer Durable and Healthcare indices were the sole gainers, up 0.3% and 0.2% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1944 cr, 1408 cr and 88 cr respectively. DIIs were net buyers to the tune of Rs 2017 cr.

Rupee depreciated 5 paise to end at 64.13/$.

For the week, Sensex and Nifty lost and 3.4% and 3.5% respectively, marking the worst fall since the week ended 12th February, 2016.

SBI reported nearly three-fold jump in its consolidated profit at Rs 3,032 crore for the quarter ended June 2017 but asset quality including subsidiaries worsened further. NII fell 1.8% to Rs 19323 cr. Net interest margin declined sharply to 2.36% from 2.74% q-o-q. Gross NPA ratio increased 86 bps to 9.97% and net NPA ratio rose 78 bps to 5.97% on sequential basis. Consolidated gross slippages for the quarter stood at Rs 30,059 crore and watch list at Rs 24,444 crore (Rs 32,427 crore QoQ). Slippages from watchlist were at Rs 7,976 cr.

Sun Pharma disappointed with a consolidated loss of Rs 425 cr, dented by one-time loss of Rs 950 cr due to provision for settlement with certain plaintiffs. Revenue fell 24.8% to Rs 6209 cr. EBIDTA plunged 62.5% to Rs 1096 cr and margin halved to 17.6% from 35.4%.

Hindalco reported a fall of 1.6% in its June quarter net profit at Rs 290 cr, affected by one-time loss of Rs 104 cr. Revenue wa up 27.5% at Rs 10407 cr. Operating profit fell 2% to Rs 1148 cr and margin fell to 11.75% from 14.8%.

Cipla posted 21% rise in net profit to Rs 409 cr. Revenue fell 3% to Rs 3525 cr. EBIDTA margin improved 600 bps to 18.3%.

Bank of Baroda reported weak earnings and deterioration in asset quality. Net profit plunged 52% y-o-y to Rs 203 cr. NII rose 1% to Rs 3405 cr. Gross NPA ratio rose 94 bps q-o-q to 11.4% and net NPA ratio rose 45 bps to 5.17%. Slippages rose to a four-quarter high of Rs 5200 cr from Rs 4077 cr q-o-q.

OUTLOOK

Japanese economy grew at an annualized rate of 4% in the June quarter, topping the 2.5% rise forecast.

Today morning, except a 1% lower Nikkei, other Asian markets are trading with gains of 0.2%-1% and SGX Nifty is suggesting about 40 points higher start for our market.

Readers would recall that, we have been sounding a word of caution after Nifty soared nearly 6% in July and achieved the first major target of 10000, that we had given in our April 3rd report.

Nifty last week nosedived 3.5% to close at 9711, vindicating our caution.

After last week's cut, Nifty is at a crucial juncture. 9711 also coincides with the 61.8% retracement level of the 9450-10140 upmove seen since 30th June. A sustained trading below 9711 would open up the possibility of the retest of 9450 bottom. In that sense, 9685, the bottom made last week, is the important support, a breach of which might lead to above mentioned outcome.

Meanwhile, 9860, the 38.2% retracement level of the recent fall, which also coincides with the 34-DMA, is the immediate hurdle, a crossover of which is required for a fresh upmove.

Coal India will report its quarterly earnings today.