ASIAN EQUITIES CHEER US-CHINA TRADE TRUCE; 10965, 11090 UPSIDE TARGETS FOR NIFTY

ASIAN EQUITIES CHEER US-CHINA TRADE TRUCE; 10965, 11090 UPSIDE TARGETS FOR NIFTY

WORLD MARKETS

US indices gained 0.8% each on Friday on renewed bets the U.S. and China could strike a deal on trade.

Reuters reported that a Chinese official said "consensus is steadily increasing" in U.S.-China trade talks. U.S. Trade Representative Robert Lighthizer said he expected the meeting to be a "success," raising hope that a trade truce between the world's largest economies could be struck.

WTI oil fell 52 cents or 1% to $50.93 a barrel and Brent eased 76 cents or 1.3% to $58.75.

European markets, except 0.2% higher Italy, fell upto 0.8%, with FTSE leading the losses. Italian Prime Minister told an Italian newspaper that he is working on a proposal to reduce the planned deficit target for 2019.

For the week, US indices soared 4.8%-5.6% with S & P 500 and Nasdaq posting best weekly performance since 2011 and Dow had the best week in two years. European markets gained 0.4%-1.2%. In Asia, Nikkei and Hang Seng climbed 3.2% and 2.2% while Shanghai inched up 0.3%.  

AT HOME

Benchmark indices ended with modest gains, extending the winning streak to fifth straight day. Sensex settled at 36194, up 24 points while Nifty added 18 points to finish at 10876. BSE mid-cap and small-cap indices gained 0.6% and 0.5% respectively. BSE Realty and Healthcare indices climbed 2% and 1.8% and respectively, becoming top gainers among the sectoral indices. Telecom and Oil & Gas indices tumbled 1.5% and 1% respectively, becoming top losers.

FIIs net sold stocks worth Rs 333 cr but net bought index futures and stock futures worth Rs 172 cr and 290 cr respectively. DIIs were net buyers to the tune of Rs 1490 cr.

Rupee appreciated 25 paise to end at 69.59/$.

For the week, Sensex and Nifty gained 3.5% and 3.3% respectively.

India’s GDP expanded at a slower-than-expected pace of 7.1% in the fiscal second quarter despite a lower base. GDP growth in first quarter stood at 8.2%, a nine-quarter high.

Fiscal deficit at the end of October stood at Rs 6.49 lakh crore, or 103.9% of full fiscal FY19 estimates as tax revenues remained muted, triggering concerns the government may miss the target for the year.

Maruti's November sales were down 0.7% y-o-y at 1.53 lakh units. M & M auto sales rose 17% to 45101 units. Escorts tractor sales were up 56.4% at 8005 units. Hero MotoCorp sales were up 0.8% at 6.10 lakh units. Eicher Motor's total motorcycle sales were down 6% at 65744 units.

November GST collections stood at Rs 97637 cr Vs Rs 100,710 cr month-on-month.

OUTLOOK

U.S. President Donald Trump and Chinese President Xi Jinping, who met for dinner on Saturday at the G-20 summit in Argentina, agreed to hold off on additional tariffs on each other's goods at the start of the new year to allow for talks to continue.

Owing to this, Asian markets are trading with gains of 1.3%-2% and US futures are up 1.5%-1.8%. SGX Nifty is suggesting about 70 points higher start for our market.

In Friday's report we had said that "10965, where 20-week moving average is placed, is the next upside target/resistance to eye" and had advised trailing the stop-loss to 10740 in long positions.

Nifty, after touching a high of 10922 in the initial trade, eased to end at 10876, but is set to open above 10900 today.

10965, where 20-week moving average is placed, continues to be immediate upside target as well as resistance to eye. Above 10965, 11090, the 61.8% retracement level of the entire 11760-10004 fall, would be the next hurdle to eye.

10744, where 200-DMA is palced, continues to be immediate support, with the stop-loss of which, trading longs can be held on to.