10420 ABOVE 10350; STAY LONG WITH THE STOP-LOSS OF 10230

10420 ABOVE 10350; STAY LONG WITH THE STOP-LOSS OF 10230

WORLD MARKETS

US indices plunged 2.2%-2.3% on Friday on escalating US-China trade war concerns and disappointing employment data.

After China announced fresh tariffs on 106 U.S. products Wednesday, President Donald Trump threatened more levies Thursday evening, stating that he has asked the United States Trade Representative to consider $100 billion in additional tariffs against China. In turn, China's Commerce Ministry said Friday the country will not hesitate to react with a "major response" to the new tariffs from the U.S.

Treasury Secretary Steven Mnuchin said there was a possibility of a trade war with China.

Also adding to pressure were comments from Fed Chief Jerome Powell that gradual interest rate increases were needed, although he did not say exactly how many rate hikes were necessary.

U.S. economy added 103,000 jobs in March, much lower than the expected 193,000 figure.

Boeing and Caterpillar, two companies that could be adversely affected by a trade war with China, fell more than 3% each.

European markets fell 0.2%-0.6%. Auto and Basic Resources fell the most.

For the week, US indices fell 0.7%-2.1%. European markets gained 1.2%-1.8%, extending winning streak to second straight week. In Asia, Japan and India gained while Shanghai and Hang Seng fell 1.2% and 0.8% respectively.

AT HOME

Benchmark indices ended marginally higher after a rangebound but choppy trade. Sensex settled 30 points higher at 33626 while Nifty finished at 10331, up 6 points. BSE mid-cap and small-cap indices climbed 0.6% each. BSE Healthcare index gained 0.9%, becoming top gainer among the sectoral indices, followed by 0.6% higher Consumer Durable index. Telecom and Teck indices were the top losers, down 1.3% and 0.7% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 525 cr, 208 cr and 59 cr respectively. DIIs were net buyers to the tune of Rs 1305 cr.

Rupee ended unchanged at 64.97/$.

For the week, Sensex and Nifty gained 2% and 2.1% respectively, extending the winning streak to second straight week.

OUTLOOK

US President Donald Trump said in a tweet on Sunday that China would take down its trade barriers and that the two countries would reach a deal on intellectual property.

Today morning, Nikkei and Shanghai are little changed while Hang Seng is up about 0.6%. SGX Nifty is suggesting about 30 points lower start for our market.

After Nifty took out the 34-DMA resistance of 10310 on Thursday, we had given the next upside target of 10420, which is the 38.2% retracement level of the entire 11171-9951 fall. Nifty, on Friday, touched a high of 10350 before closing at 10332 and is set to open around 10300 today.

10230 is the immediate support on the hourly chart, with the stop-loss of which, trading longs can be held on to.

10350, the top made Friday, also coincides with the 33% retracement level of the 11171-9951 fall, making it an immediate hurdle, above which 10420, as mentioned above, would be the next target to eye.