NIFTY RETREATS FROM THE VICINITY OF 11650 HURDLE; 11461 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY RETREATS FROM THE VICINITY OF 11650 HURDLE; 11461 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS

US indices gained 0.5%-0.9% on Friday with the S & P 500 notching its first close above 3000 on continued optimism over Fed rate cut.

Dow Inc. led the Dow Industrials higher, rising 4%. Intel and Caterpillar meanwhile, climbed 2.7% and 3.3%, respectively.

US crude rose 1 cent to $60.21 a barrel while Brent gained 25 cents to $66.77.

Earlier, data showed that China’s dollar-denominated exports fell 1.3% in June from a year ago while imports fell 7.3% in the same period. Exports and imports were expected to have declined by 2% and 4.5% respectively.

In Europe, FTSE and DAX ended marginally in the red while CAC and Italy rose 0.4% and 0.1% respectively. Euro zone factory output grew by 0.9% in May on the month, exceeding modest market expectations of a 0.2% rise.

For the week, US indices gained 0.8%-1.5%. In Europe, DAX nosedived 2% while FTSE and CAC were off 0.6% and 0.4% respectively. In Asia, Shanghai tumbled 2.7%, Hang Seng was off 1% and Nikkei fell 0.3%. Our own Sensex and Nifty fell 2% and 2.2% respectively. For the week, West Texas Intermediate futures rose nearly 5% this week while Brent climbed more than 4%.

AT HOME

Benchmark indices ended lower by about a fourth of a percent after a choppy session. Sensex lost 87 points to settle at 38736 while Nifty finished at 11552, down 30 points. BSE mid-cap and small-cap indices rose 0.4% and 0.2% respectively. BSE Capital Goods and Telecom indices tumbled 1.2% and 1% respectively, becoming top losers among the sectoral indices while Metal and Realty indices were the top gainers, up 0.9% and 0.6% respectively. BSE advance-decline ratio stood at 1:1.1.

FIIs net sold stocks worth Rs 850 cr but net bought index futures and stock futures worth Rs 171 cr and 296 cr respectively. DIIs were net buyers to the tune of Rs 940 cr.

Rupee depreciated 24 paise to end at 68.68/$.

For the week, Sensex and Nifty fell 2% and 2.2% respectively, breaking 2-week winning streak.

Retail inflation hit an eight month high of 3.18% in June vs 3.05% in May. Core CPI eased to 4.1% from 4.2%. The pace of industrial production growth slipped to 3.1% in May from an upwardly revised 4.3% mark in April, missing street expectations marginally.

Infosys delivered in-line revenue figures while margin and profit were a beat. Dollar revenue growth stood at 2.3% while margins fell 100 bps to 20.5%. It upped its FY20 growth guidance to 8.5%-10% from 7.5-9.5% earlier. Margin guidance was unchanged at  21-23%.

OUTLOOK

Markets in Japan are closed today for a holiday while Shanghai and Hang Seng are trading with cuts of 1.4% and 1.2% respectively. SGX Nifty is suggesting a flattish start for our market.

In Friday's report we had reiterated the view that 11625-11650 continues to be immediate resistance zone while 11461, the low made Tuesday continues to be immediate support.

Nifty, after touching a high of 11639, slipped to end at 11552, getting resisted in the resistance zone mentioned above and vindicating our view.

11461, the low made last week, continues to be important immediate support, upon breach of which 11425, the lower end of the gap created by big gap-up opening after exit polls, would be the next support to eye.

11650 continues to be immediate hurdle, a crossover of which required for a fresh upmove. If that happens, 11721, the 50% retracement level of the recent 11980-11461 fall, would be the next target/resistance to eye.