12041 CONTINUES TO BE IMMEDIATE HURDLE; 11640 IMPORTANT SUPPORT

12041 CONTINUES TO BE IMMEDIATE HURDLE; 11640 IMPORTANT SUPPORT

WORLD MARKETS

US indices fell 0.4%-0.9% on persisting worries over US-China trade war and decline in interest rate which fueled economic slowdown concerns.

Trump said on Monday the U.S. was “not ready” to make a deal with China, before adding he expected one in the future. Trump also said tariffs on Chinese imports could go up “substantially.”

On the other side, a commentary piece in Chinese state-run newspaper Xinhua hinted China would not bend to U.S. demands to change its state-run economy. A Chinese official also hinted on Tuesday China could use its dominance over rare earth metals as leverage in the trade war.

The yield on the benchmark 10-year Treasury note dropped to around 2.26%, its lowest level in 19 months.

US crude rose 59 cents or 0.9% to 59.14 but Brent fell 3 cents to $70.08.

European markets eased 0.1%-0.5%. The GfK consumer sentiment indicator for June hit a worse-than-expected reading of 10.1 points.

AT HOME

After falling about half a percent, benchmark indices recouped all the losses in last hour to end marginally higher. Sensex settled at 39749, up 66 points while Nifty added 4 points to finish at 11928. BSE mid-cap and small-cap indices rose 0.1% and 0.4% respectively. BSE IT and Teck indices climbed 1.6% and 1.4% respectively, becoming top gainers among the sectoral indices while Telecom and Capital Goods indices were the top losers, down 1.2% and 0.8% respectively.

FIIs net sold stocks and index futures worth Rs 501 cr and 947 cr but net bought stock futures worth Rs 133 cr. DIIs were net buyers to the tune of Rs 269 cr.

Rupee depreciated 20 paise to end at 69.69/$.

Sun Pharma missed estimates on all parameters with profits declining by 53% y-o-y to Rs 636 cr. Revenue rose 2.7% to Rs 7164 cr, EBITDA plunged 40% to Rs 1017 cr and margin fell 990 bps to 14.2%. Auropbindo Pharma's topline beat estimate but operational performance and bottomline was a miss. Revenue rose 31% to Rs 5292 cr, EBITDA was up 34% at Rs 1057 cr, margin rose 50 bps to 20% and net profit was up 11% at Rs 585 cr.

OUTLOOK

Today morning, Nikkei is down more than a percent while Hang Seng and Shanghai are off about half a percent. SGX Nifty is suggesting about 30 points lower start for our market.

For past couple of days, we have been mentioning that 12041 and 11614, the top and bottom made on the election result day, are important support and resistance levels to eye and that long positions can be held with the stop-loss of 11614.

Yesterday, after touching an intraday low of 11864, Nifty rebounded to end at 11928 and is set to open modestly lower today.

12041 continues to be immediate hurdle to eye, a crossover of which is required for a fresh upmove. If that happens 12500 would be next major target.

11614 continues to be immediate support, with the stop-loss of which, existing longs should be held on to.

M & M will report its quarterly earnings today.