NIFTY REBOUNDS AFTER ACHIEVING 11775 TARGET; 11990 IS THE IMMEDIATE HURDLE

NIFTY REBOUNDS AFTER ACHIEVING 11775 TARGET; 11990 IS THE IMMEDIATE HURDLE

WORLD MARKETS

US indices soared 1%-1.7% as disappointing nonfarm payroll figures boosted speculation of an interest rate cut from the Federal Reserve.

The U.S. economy added 75,000 jobs in May, as against expected figure of 1,80,000 and also marking the second time in four months that jobs growth totaled less than 100,000. Wage growth also slowed.

Treasury yields fell broadly, with the benchmark 10-year rate dropping to 2.05%, its lowest level since 2017, before recovering to 2.09. Dollar index fell 0.4% to 96.56, its lowest level in 2-1/2 months.

Officials from the U.S. and Mexico continued talks on Friday. President Trump tweeted “there is a good chance” that US and Mexico can make a deal. Meanwhile, at the St Petersburg International Economic Forum, Russian President Vladimir Putin criticized Washington’s treatment of Chinese telecommunications giant Huawei.

US oil and Brent rose 2.7% each to $53.99 and $63.33 a barrel respectively after Saudi Arabia said OPEC was close to agreeing to extend an output production cut beyond June

European markets gained 0.8%-1.6%.

For the week, Dow jumped 4.7%, breaking six-week losing streak and also marking its biggest weekly gain since November. The S&P 500 and Nasdaq were up 4.4% and 3.9% respectively. European markets rose 2.4%-3%. In Asia, while Nikkei and Hang Seng rose 1.4% and 0.2% respectively, Shanghai tumbled 2.4%.

AT HOME

After falling about six tenth of a percent in the initial trade, benchmark rebounded smartly through the session to end higher by nearly a fifth of a percent. Sensex added 86 points to settle at 39615 while Nifty finished at 11870, up 26 points. BSE mid-cap and small-cap indices fell 0.2% and 0.1% respectively. BSE Finance index gained 0.7%, becoming top gainer among the sectoral indices, followed by 0.6% higher Consumer Durable index and Bankex. Utilities and Power indices were the top losers, down 1.3% and 0.8% respectively.

FIIs net sold stocks and index futures worth Rs 479 cr and 287 cr respectively but net bought stock futures worth Rs 307 cr. DIIs were net buyers to the tune of Rs 180 cr.

Rupee depreciated 20 paise to end at 69.47/$.

For the week, Sensex and Nifty lost 0.2% and 0.4% respectively, breaking 3-week winning streak.

OUTLOOK

Trump, on Friday, announced that the US and Mexico have reached a deal to avoid the implementation of tariffs, originally set to kick in today.

Today morning, Nikkei and Hang Seng are up about a percent each while Shanghai is little changed. SGX Nifty is suggesting about 50 points higher start for our market.

Readers would recall that after Nifty broke 11940 support, we had given downside target zone of 11800-11775.

Nifty, on Friday, after touching a low of 11770, rebounded to close at 11870, achieving 11775 target mentioned above and vindicating our view.

The benchmark is slated to open above 11900 today.

11990, the two third retracement level of the recent 12103-11770 fall, is the immediate hurdle to eye above which 12103 itself would be next resistance.

11770, the bottom made on Friday, is the immediate support to eye below which 34-DMA, placed around 11660, would be next support.