NIFTY RETREATS AFTER ACHIEVING 10987 TARGET; 10715 IS IMMEDIATE SUPPORT

NIFTY RETREATS AFTER ACHIEVING 10987 TARGET; 10715 IS IMMEDIATE SUPPORT

WORLD MARKETS

Dow and S & P 500 rose 0.3% and 0.1% respectively but Nasdaq fell 0.2% on Friday as Chevron, Exxon Mobil and Merck all closed higher while a fall in Amazon weighed on Nasdaq.

The U.S. economy added 304,000 jobs in January, much higher than the expected figure of 170,000. However, wages grew at a much slower-than-expected pace and December figure was revised downward sharply.

Amazon fell 5.4% following weaker-than-expected revenue guidance for the first quarter and warning about increasing investments. On the flip side, Merck, Exxon Mobil and Chevron rose after posting better-than-expected earnings.

China's trade delegation reportedly said Washington and Beijing had made "important progress" after two days of trade negotiations. US President Trump also said he would soon meet with Chinese premier Xi Jinping to try to reach a comprehensive trade deal. However, White House insisted it sees March 1 as a hard deadline for a deal.

US oil rose 2.7% or $1.47 to $55.26 a barrel while Brent added 3.1% or $1.91 to reach $62.75.

China's Caixin/Markit Manufacturing PMI came in at 48.3 in January, compared to 49.7 in December, marking the second-consecutive month of contraction and the lowest reading since 2016. Earlier, official data showed PMI reading of 49.5 — higher than 49.3 expected and the 49.4 reported in the previous month.

In Europe, FTSE and CAC gained 0.7% and 0.5% respectively, DAX rose 0.1% while Italy and Spain fell 0.8% and 0.4% respectively. Eurozone inflation slowed to 1.4% in January, from 1.6% a month earlier.

For the week, US indices gained 1.3%-1.6% with the Dow and Nasdaq extending the winning streak to sixth consecutive week. In Europe, FTSE and CAC gained 3.1% and 1.9% respectively but DAX fell 0.9%.  In Asia, Hang Seng and Shanghai gained 1.3% and 0.6% respectively while Nikkei ended flat. WTI posted a weekly gain of nearly 3% while Brent rose 2%.

AT HOME

Benchmark indices ended higher by 0.6% after the usual budget day volatility, extending the winning streak to second straight day. Sensex settled at 36469, up 212 points while Nifty added 62 points to finish at 10893. BSE mid-cap and small-cap indices gained 0.6% and 0.2% respectively.  BSE Auto index soared 2.6%, becoming top gainer among the sectoral indices, followed by 1.8% higher Consumer Discretionary Goods & Services index. Metal index tumbled 3.8%, becoming top loser, followed by 1.8% lower Basic Material index.

FIIs net bought stocks, index futures and stock futures worth Rs 1316 cr, 1711 cr and 857 cr respectively. DIIs were net sellers to the tune of Rs 5 cr.

Rupee depreciated 16 paise to end at 71.24/$.

India's January Nikkei manufacturing PMI rose to 53.9 from 53.2 month-on-month.

Interim Budget presented by Mr Piyush Goyal pegged FY20 fiscal deficit target at 3.4%, same as the revised FY19 fiscal deficit figure. FY20 gross market borrowing was pegged at Rs 7.1 lk cr while net borrowings were pegged at Rs 4.37 lk cr.

The budget announced PM Kisan Samman Nidhi Package amounting to Rs 75000 cr under which farmers owning upto 2 hectares will get Rs 6000 per year.  A mega pension scheme for unorganised sector was also announced under which those having monthly income up to Rs 15,000 will be entitled to assured monthly pension of Rs 3000 once they attain the age of 60.

Housing sector got a major boost. Capital gains exemption under Sec 54 will now be available on 2 house properties. Tax relief on notional rent from unsold housed has been extended to 2 years. Also there will be no TDS on house rent upto Rs 2.4 lk per year. There will be no tax on notional rent on second self-occupied house.

On personal income front, income upto Rs 5 lakh per year will get full tax rebate. Standard deduction for salaried has been revised to Rs 50000 from Rs 40000.  TDS limit on Post-office savings has been hiked from Rs 10000 to Rs 40000.

Vedanta Ltd tumbled after company's subsidiary Cairn India Holdings bought a stake of Rs 1,431 crore in Anglo American from Volcan Investments, a family trust of promoter Anil Agarwal, raising corporate governance issues.

SBI posted a net profit of Rs 3955 cr for October-December quarter as against a loss of Rs 2416 cr in the same quarter last year, driven by fall in provisions and NII growth. NII grew 21.4% y-o-y to Rs 22691 cr. Gross NPA ratio improved 124 bps q-o-q to 8.71% and Net NPA ratio fell 89 bps to 3.95%. Fresh slippages fell to Rs 4532 cr from Rs 10725 cr q-o-q.

Dr Reddy posted in-line with estimated revenue but bottomline, EBITDA and margin surpassed estimate. Revenue rose 1.2% to Rs 3850 cr, EBITDA was up 7.4% at Rs 865 cr, margin improved 130 bps to 22.5% and net profit rose 45% to Rs 485 cr.

Maruti's January sales stood at 1.517 lakh, which were flat on y-o-y basis. Escorts total sales rose 12.7% to 5991 units. Ashok Leyland sales rose 9% to 19741 units. Hero Motocorp sales dropped 9% to 5.83 lakh units.

Titan's revenue rose 34.4% to Rs 5672 cr, EBITDA was up 31.3% at Rs 584 cr, margin fell 20 bps to 10.3% and net profit climbed 35% to Rs 416 cr.

OUTLOOK

Data from China on Sunday showed, the Caixin/Markit services purchasing managers' index (PMI) fell slightly to 53.6 in January from 53.9 in December, but well above the 50.0 mark separating growth from contraction. The composite manufacturing and services PMI number fell from 52.2 to 50.9.

Shanghai this while week is shut due to Lunar new year holidays. Today, Nikkei is up 0.3% while Hang Seng is a tad lower. SGX Nifty is suggesting about 15 points lower start for our market.

After the crossover of 10800 hurdle, we were working with upside target of 10987. Nifty, on Friday, surged to touch a high of 10983 before closing at 10893, achieving the target mentioned above and vindicating our view.

10987, the top made on 21st January, continues to be important resistance to eye, a crossover of which is required for a fresh upmove. If that happens, 11090, the 61.8% retracement level of the entire 11760-10004 fall, would be the next upside target.

10715 is the immediate support on the hourly chart, with the stop-loss of which, trading longs can be held on to.