10700 IS THE NEXT DOWNSIDE TARGET; 10970 IMMEDIATE HURDLE

10700 IS THE NEXT DOWNSIDE TARGET; 10970 IMMEDIATE HURDLE

WORLD MARKETS

Dow and Nasdaq climbed 1.5% each while S & P 500 rose 1.3% on the back of a tentative deal to avoid government shutdown and improved prospects for a U.S.-China trade deal.

Congressional negotiators struck a deal in principle that would keep the government open and avoid a shutdown on Friday.

U.S. President Trump said he was open to postponing the March 2 deadline for tariffs if Washington and Beijing can reach a trade deal soon.

US crude rose 1.3% to $53.10 a barrel and Brent added 81 cents, or 1.3% to reach $62.32 on steep OPEC production cuts and Saudi Arabia's plan to drop March crude output by more than a half a million barrels per day below its pledge.

European markets, except a flattish FTSE, gained 0.5%-1.1%.

AT HOME

Sensex and Nifty fell 0.7% and 0.5% respectively, extending the losing streak to fourth and third straight day respectively. Sensex lost 241 points to settle at 36153 while Nifty finished at 10831, down 57 points. BSE mid-cap and small-cap indices fell 0.1% and 0.4% respectively. BSE Telecom and Realty indices tumbled 1.7% and 1.3% respectively, becoming top losers among the sectoral indices while Metal index soared 1.6%, becoming top gainer, followed by 0.3% higher Healthcare, Energy and Basic Material indices.

FIIs net sold stocks and stock futures worth Rs 467 cr and 546 cr respectively but net bought index futures worth Rs 401 cr. DIIs were net sellers to the tune of Rs 123 cr.

Rupee appreciated 46 paise to end at 70.70/$.

January CPI eased further to 2.05% from 2.19% in December. Core CPI eased to 5.4% from 5.7%. December IIP growth stood at 2.4% as against 0.5% in November.

Coal India was a big beat on all counts. Sales rose 15.4% to Rs 25045 cr, margin rose to 27.10% from 20.18% and net profit surged 50% to Rs 4566 cr.

Sun Pharma too was better-than-estimates as margin and revenue growth came in at 8-quarter high. Revenue rose 16.3% to Rs 7740 cr, margin rose 600 bps to 27.8% and PAT grew four-fold to Rs 1242 cr from Rs 322 cr.

Hindalco (including Utkal) posted a net profit growth of 47.3% at Rs 713 cr. EBITDA was up 3.5% at Rs 1926 cr, margin fell 80 bps to 16.1% and revenue rose 8.1% to Rs 11938 cr.

OUTLOOK

Today morning, Nikkei is up 1.4% while Hang Seng and Shanghai are little changed. SGX Nifty is suggesting about 20 points higher start for our market.

Readers would recall that we had turned our view negative on Nifty after 10930 support was taken out. After the benchmark achieved downside target of 200-DMA placed at 10857, we, in yesterday's report, had said that below 10857, 10700, where a trendline adjoining bottoms made in December and January was placed, would be the next target/support to eye.

Nifty breached 10857 support yesterday and fell all the way to 10823 before closing at 10831 and is set to open around 10850 today.

10700 continues to be next downside target/support to eye.

Immediate hurdle on the hourly chart is placed around 10970, with the stop-loss of which, trading shorts can be held on to.