11800-11775 IS THE SUPPORT ZONE; 11975 IMMEDIATE HURDLE

11800-11775 IS THE SUPPORT ZONE; 11975 IMMEDIATE HURDLE

WORLD MARKETS

US indices rose 0.5%-0.7%, extending the winning streak on third straight day, on news that the U.S. is considering a postponement to Trump’s 5% tariff on all Mexican imports after the country’s negotiators asked for more time to hash out a deal. The tariff is set to kick in on Monday.

Meanwhile, Trump told reporters at the Irish airport of Shannon that tariffs on China could be raised by another $300 billion if necessary.

US crude rose 91 cents to $52.51 a barrel while Brent rose $1.04 to $61.67.

In Europe, FTSE rose 0.6% while DAX and CAC fell a fourth of a percent each. European Central Bank President Mario Draghi said it would delay its first post-crisis interest rate hike till at least the middle of next year. In a statement, the ECB said it would hold its key policy rate at the current -0.4% and continue to reinvest in maturing bonds in its 2.6 trillion euro ($2.9 trillion) debt portfolio. The central bank also announced it will pay lenders an interest rate of up to 0.3% to borrow. Meanwhile, GDP growth for the euro area was confirmed at 0.4% quarter-on-quarter and 1.2% year-on-year.

AT HOME

Sensex and Nifty nosedived 1.4% and 1.5% respectively, suffering the steepest cut of the calendar 2019. Sensex settled at 39529, down 553 points while Nifty lost 178 points to finish at 11843. BSE mid-cap and small-cap indices tumbled 1.8% and 1.6% respectively. All the BSE sectoral indices ended in red with Oil & Gas and Capital Goods indices leading the losses, down 3% and 2.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1449 cr, 1473 cr and 211 cr respectively. DIIs were net sellers to the tune of Rs 651 cr.

Rupee depreciated 1 paise to end at 69.26/$.

Monetary Policy Committee unanimously cut the repo rate by 25 bps and changed the stance to "Accommodative" from "Neutral". It lowered the FY20 GDP growth forecast to 7% from 7.2% earlier. On the inflation front, while it raised H1FY20 CPI forecast to 3-3.1% from 2.9-3%, H2 forecast was cut to 3.4-3.7% from 3.5-3.8%.

OUTLOOK

Markets in China and Hong Kong are closed on Friday for a holiday. Nikkei is up 0.3% and SGX Nifty is suggesting about 20 points lower start for our market.

Readers would recall that after Nifty touched a record high of 12103 on Monday, we had advised trailing the stop-loss in long positions to 11940. Nifty yesterday broke this support and plunged all the way to 11830 before closing at 11843 and is set to open modestly lower today.

11800-11775, which are the 61.8% and 67% retracement levels respectively of the recent 11614-12103 upmove, represent the next support zone for Nifty. Below 11775, 34-DMA, placed around 11660, would be the crucial support to eye.

11975 is the immediate resistance hourly chart, with the stop-loss of which, trading shorts can be held on to.