DOW BREAKS EIGHT-DAY WINNING STREAK ON SOARING YIELD; NIFTY RETREATS FROM THE VICINITY OF 10950 TARGET

DOW BREAKS EIGHT-DAY WINNING STREAK ON SOARING YIELD; NIFTY RETREATS FROM THE VICINITY OF 10950 TARGET

WORLD MARKETS

US indices fell 0.7%-0.8%, with the Dow snapping 8-day winning streak after Home Depot sales missed forecasts and the U.S. 10-year Treasury yield rose to 3.09%, its highest in around seven years.

US retail sales increased 0.3% in April, down from a 0.8% gain in March, which was revised higher.

Dollar index rose 0.7% to 93.23, its strongest level since December.

US oil rose 35 cents to $71.31, settling near 3-1/2 year high. Brent rose 19 cents to $78.42 a barrel. Both however, retreated from higher levels on concerns that China's reported weaker-than-expected investment and retail sales in April and a drop in home sales.

European markets, except a marginally lower DAX, gained 0.2%-0.3%. Euro-area economic growth decelerated to 0.4% in the first quarter, down from 0.7% in the fourth quarter of last year. Germany, the euro zone's largest economy, slowed to 0.3% growth in the first quarter, down from 0.6% in the prior quarter. Germany's ZEW economic sentiment index for May showed a reading of -8.2 — it's lowest since November 2012.

AT HOME

After climbing more than a percent on early indications of BJP getting simple majority in Karnataka assembly elections, benchmark indices gave away all the gains to end marginally in the red. Sensex settled at 35544, down 13 points while Nifty lost 5 points to finish at 10802. BSE mid-cap and small-cap indices fell 0.8% and 0.6% respectively. BSE Realty and Industrial indices tumbled 1.9% and 1% respectively, becoming top losers among the sectoral indices while IT and Teck indices gained 0.5% and 0.3% respectively, becoming top gainers.

FIIs net sold stocks and stock futures worth Rs 518 cr and 145 cr respectively but net bought index futures worth Rs 660 cr. DIIs were net buyers to the tune of Rs 531 cr.

Rupee plunged 56 paise to end at 68.07/$, it's weakest since January 25, 2017.

13.72 EXPR 25.91 5.17% 39.63 4.6PRUDENT

According to final tally, BJP won 104 out of 222 seats in Karnataka, falling short of simple majority. Both BJP and Congress-JDS post-poll alliance have claimed right to form government and ball is now governor’s court.

India's trade deficit widened to $13.72 bn in April from $13.69 bn in March. Exports rose 5.2% y-o-y to $13.7 bn and imports rose 4.6% to $39.6 bn.

Lupin posted a net loss of Rs 783.5 crore in the fourth quarter ended March due to a one-time write-off of Rs 1464 cr on the Gavis acquisition. Revenue fell 5.2% to Rs 4034 cr. EBIDTA fell 25.6% to Rs 699 cr and operating margin fell to 17.3% from 22.1% y-o-y.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.3%-0.7% and SGX Nifty is suggesting about 60 points lower start for our market.

After Nifty crossed the 10785 hurdle on Friday, we had given upside target of 10950-10970. Yesterday, after touching a high of 10929, Nifty slipped to end at 10802 and is set to open lower today.

After yesterday's move, immediate support has moved up to 10760, a breach of which will generate a "Sell" on the hourly chart and would pave the way for further correction. 20-DMA, placed around 10670, would be the next support to eye if that happens.

10929, the top made yesterday, is now the immediate hurdle, a crossover of which is required for fresh upmove.

Traders are advised to exit longs if Nifty sustains below 10760.

ITC, Tata Steel, JSW Steel and Hindalco will report their quarterly earnings today.