NIFTY REBOUND FROM THE VICINITY OF 11550 SUPPORT; 11700 IS THE IMMEDIATE HURDLE

NIFTY REBOUND FROM THE VICINITY OF 11550 SUPPORT; 11700 IS THE IMMEDIATE HURDLE

WORLD MARKETS

After opening with deep cuts of nearly a percent and half, US indices rebounded through the session to end with cuts of 0.2%-0.5% on hopes that China and the U.S. will still strike a trade deal despite US President Trump’s threat to hike tariffs on Chinese imports over the weekend.

Media reports suggested that a Chinese delegation will still travel to the U.S. to continue negotiations this week, albeit with a smaller group than originally planned.

Meanwhile, Trump claimed in another tweet yesterday that the U.S. is losing between $600 and $800 billion a year on trade, noting: “We’re not going to be doing that anymore.”

US crude rose 31 cents to $62.25 a barrel while Brent rose 39 cents to $71.24 on the back of rising tensions between the United States and Iran.

European markets ended with cuts of 0.8%-1.6%. Eurozone IHS Markit PMI came in at 51.6 in April from a reading in March of 51.6.

Earlier, Shanghai Composite ended with deep cuts of 5.6% and Hang Seng fell 2.9%.

AT HOME

World equities plunged on the back of dramatic escalation of trade tension between US and China. While Shanghai and Hang Seng nosedived 5.6% and 2.9% respectively, our own benchmark indices fell nearly a percent, extending the losing streak to fourth straight day. Sensex settled at 38600, down 362 points while Nifty lost 114 points to finish at 11598. BSE mid-cap and small-cap indices fell eight tenth of a percent. Except 0.5% and 0.2% higher Telecom and Oil & Gas indices, all the BSE sectoral indices ended in red with Consumer Durable and Metal indices leading the losses, down 2.8% and 2.1% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 949 cr, 913 cr and 564 cr respectively. DIIs were net buyers to the tune of Rs 90 cr.

Rupee depreciated 19 paise to end at 69.40/$.

India's April Nikkei Services PMI weakened to 51 from 52 in March. Composite PMI eased to 51.7 from 52.7.

ICICI Bank reported healthy set of numbers. Loan growth, at 14.1% y-o-y, was a 3-year high and net interest margin, at 17-quarter high, beat estimate. Gross NPA ratio improved to 7.38% from 7.75% q-o-q and Net NPA ratio improved to 2.29% from 2.58%. GNPA ratio was the lowest in 11 quarters. Net profit fell 5% y-o-y to Rs 969 cr while NII jumped 26.5% to Rs 7620 cr. Gross slippages rose to Rs 3547 cr from Rs 2091 q-o-q.

Bharti Airtel's numbers were operationally good, led by India mobile segment. India mobile business revenue grew at 4.3% q-o-q, the highest in last 3 years. Consolidated revenue rose 1.8% while margin stood at 32%.  

OUTLOOK

Today morning, Nikkei, which has opened after holidays, is down nearly a percent while Shanghai and Hang Seng are up about half a percent. SGX Nifty is suggesting about 30 points higher start for our market.

In yesterday's report we had said that "11624 continues to be immediate support. If that gets breached, 34-DMA, placed around 11600, followed by 11550 would be next supports to eye."

Nifty broke 11624 support and fell all the way to 11571 before closing at 11598, taking support in the 11600-11550 support zone as indicated above.

11550 continues to be crucial downside support, upon breach of which, 11370, the 38.2% retracement level of the entire 10585-11856 upmove, would be the next support to eye.

On the way up, 11700, the upper level of the gap created by yesterday's gap down opening, is the immediate hurdle, upon crossover of which, 11800 would be next resistance to eye.

VEDL, Escorts and CEAT will report their quarterly earnings today.