HERE COME THE BIG DAY

HERE COME THE BIG DAY

WORLD MARKETS

US indices fell 0.3%-0.4% on persisting trade worries and declines in Qualcomm and retailer shares.

Treasury Secretary Steven Mnuchin said that a trip to Beijing to resume trade negotiations has not been scheduled yet, reducing hopes of a speedy resolution to the U.S.-China trade war.

Also, media reports from China suggested that restrictions on Chinese telecom giant Huawei have led China to rethink its entire economic relationship with the U.S and that China is considering dropping purchases of natural gas from the U.S.

Minutes from the U.S. Federal Reserve’s May meeting indicated the central bank will not make any moves regarding interest rates “for some time” even if the economy improves.

Qualcomm plunged 11% — it's biggest one-day drop since Jan. 23, 2017 — after a U.S. judge ruled the chipmaker violated antitrust law by unlawfully suppressing competition in the cellphone chip space. Lowe’s fell 11.9% on weaker-than-expected earnings. Nordstrom dropped 9.3% as its quarterly earnings and revenue missed expectations. Target on the other hand rose more than 9% as its earnings and revenue topped analyst expectations.

US crude plunged $1.71 or 2.7% to $61.39 and Brent fell $1.19 or 1.7% to $70.99 a barrel after data from EIA showed U.S. crude inventories swelled by 4.7 million barrels in the latest week to their highest since July 2017.

European markets ended mixed with modest changes.

AT HOME

It was a day of consolidation as benchmark indices ended modestly higher after trading in a narrow range through the session. Sensex added 140 points to settle at 39110 while Nifty finished at 11737, up 28 points. BSE small-cap index gained 0.5% but mid-cap index fell 0.2%. BSE Bankex and Capital Goods indices gained 0.9% each, becoming top gainers among the sectoral indices while FMCG index fell 0.8%, becoming top loser, followed by 0.6% lower Consumer Durable, IT and Teck indices.

FIIs net sold stocks and stock futures worth Rs 965 cr and 480 cr respectively but net bought index futures worth Rs 136 cr. DIIs were net sellers to the tune of Rs 158 cr.

Rupee appreciated 5 paise to end at 69.66/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.4%-0.7% and SGX Nifty is suggesting about 30 points lower start for our market.

The big event to watch out today would be the counting of votes and actual result of the Parliament election.

We have already seen Nifty rising nearly 400 points reacting to exit polls and hence in our opinion, market has already factored in clear majority for NDA. Now further reaction will depend the exact number. In our opinion, 300 to 330-340 would be neutral, 350+ would be quite positive, below 300 to 270-260 would be slightly negative and below 250 would be very negative. 

In terms of levels, 11883, the top made on Tuesday, is the immediate hurdle, upon crossover of which 12000-12080 would be the next target zone. If this zone is also surpassed, the big target/resistance to watch out would be 12500, where the upward sloping trendline adjoining tops made in February 2018 and September 2018, is placed.

On the way down 11591-11426, the gap created by Monday's gap up opening, is the first support zone to eye, below which 11108, the low made last week, would be the next major support. In case of this level also giving way, 10585, the bottom made in February, would be the next support to eye.

Banking/Financial services, Capital Goods/Infra are the sectoral which react most on the either side and that is likely to be case even this time.

Counting days have usually been very volatile and today is unlikely to be any exception. Hence, traders are advised to exercise caution.