NIFTY NEARS 10870 TARGET; TRAIL STOP-LOSS TO 10770

NIFTY NEARS 10870 TARGET; TRAIL STOP-LOSS TO 10770

WORLD MARKETS

Dow ended flat while S & P 500 and Nasdaq gained 0.2% and 0.6% respectively after digesting Trump-Kim agreement and awaiting Fed decision.

Trump and North Korea leader Kim Jong Un signed an agreement that pledged to create a lasting "peace regime" on the Korean Peninsula, although the statement was criticized for lacking in detail.

US consumer prices rose 2.8% y-o-y in May, the biggest advance since February 2012, after rising 2.5% in April. Cor CPI was up 2.2%.

U.S. Treasury yields rose following the report, with the benchmark 10-year note rate at 2.966%.

In Europe, DAX was flat while FTSE and CAC fell 0.4% each.

AT HOME

Benchmark indices gained about half a percent to close at the highest level since 1st February, marking the highest close in nearly four and a half months. Sensex added 209 points to settle at 35692 while Nifty finished at 10842, up 55 points. BSE mid-cap and small-cap indices gained 0.9% and 0.5% respectively. BSE Healthcare and Capital Goods indices climbed 1.9% and 1.2% respectively, becoming top gainers among the sectoral indices while Metal index was the top loser, down 0.6%, followed by 0.3% lower Telecom and Basic Material indices.

FIIs net sold stocks and index futures worth Rs 1169 cr and 494 cr respectively but net bought stock futures worth Rs 445 cr. DIIs were net buyers to the tune of Rs 1327 cr.

Rupee depreciated 6 paise to end at 67.48/$.

India’s industrial production grew 4.9% in April, as compared with 4.4% jump in March. Retail inflation hit a four-month high of 4.87% in May from April’s 4.58% driven by costlier food and fuel. Core inflation — comprising non-food and non-fuel components — was at a 45-month high, at 6.17%.

OUTLOOK

Today morning, Nikkei is up 0.3% but Hang Seng and Shanghai are down nearly half a percent. SGX Nifty is suggesting about 15 points lower start for our market.

At the risk of repeating, we have been working with target of 10870, where a trendline adjoining tops made in January and May is placed, after 10770 hurdle was taken out.

Nifty yesterday touched a high of 10856 before closing at 10842, nearly achieving this target and vindicating our view.

10870 continues to be immediate hurdle, a crossover of which is required for a fresh upmove. 10930, the top made in May, would be the next target if that happens.

Meanwhile, immediate support on the hourly chart has moved up to 10770, with the stop-loss of which, trading longs should be held on to.

The Federal Reserve ends its two-day meeting today and is widely expected to announce a rate hike. Markets will also be looking for clues on the central bank's rate hike trajectory this year.