11180 ABOVE 11090; RBI POLICY IN FOCUS

11180 ABOVE 11090; RBI POLICY IN FOCUS

WORLD MARKETS

US indices fell 0.1%-0.4%, with the s & P 500 breaking 5-day winning streak, after digesting mixed quarterly earnings results and President Donald Trump's second State of the Union address.

General Motors, Walt Disney and Snap reported better-than-forecast results. Eli Lilly and Cummins, meanwhile, reported earnings that missed expectations.

In his speech, Trump addressed issues like infrastructure spending, drug pricing and trade. On the issue of border wall along the U.S.-Mexico border, Trump reiterated his belief the U.S. needs a border wall, but did not declare a state of emergency as he had previously threatened to do. He also said China and the U.S. are working on a new trade deal, but noted it must "include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs."

US crude rose 35 cents to $54.01 a barrel and Brent rose 64 cents to $62.62.

In Europe, FTSE and CAC lost 0.1% each while DAX was down 0.4%. German industrial orders unexpectedly fell in December, impacted by a global slowdown and rising trade barriers.

AT HOME

Sensex and Nifty soared 1% and 1.2% respectively, extending the winning streak to fifth straight day and closing at the highest level since 19 September and 25th September respectively. Sensex settled at 36975, up 358 points while Nifty added 128 points to finish at 11062. BSE mid-cap index however fell 0.1% and small-cap index gained just 0.05%. BSE Metal and Teck indices climbed 2.4% and 1.7% respectively, becoming top gainers among the sectoral indices while Consumer Durable and Power indices were the top losers, down 0.4% and 0.2% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 695 cr, 2818 cr and 866 cr respectively. DIIS were net buyers to the tune of Rs 525 cr.

Rupee appreciated 1 paise to end at 71.55/$.

OUTLOOK

Today morning, Nikkei is down and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had reiterated the view that "Once 10985 is taken out decisively, 11090, the 61.8% retracement level of the entire 11760-10004 fall, would be the next upside target".

Nifty crossed 10985 in the initial trade and surged all the way to 11072 before closing at 11062.

11090, as mentioned above, continues to be immediate upside target to eye. Above 11090, 11180, the 67% retracement level of the 11760-10004 fall, would be the next upside target.

Immediate support on the hourly chart has moved up to 10900, with the stop-loss of which, trading longs can be held on to.

Key event to watch out today would be the monetary policy review by the Monetary policy committee, the first under the leadership of new RBI Governor Shaktikanta Das. The key factor going in favour of rate cut is the December CPI, which at 2.19% hit an 18-month low. However, the factors against the rate cuts are core CPI, which was higher at 5.73% owing to higher health and education inflation and the recent expansionary budget. However, there is consensus that the MPC will shift its stance from 'calibrated tightening' to 'neutral'.

Tata Motors will report quarterly earnings today.