10800, 10700 ARE NEXT SUPPORTS; 11150 IMMEDIATE HURDLE

10800, 10700 ARE NEXT SUPPORTS; 11150 IMMEDIATE HURDLE

WORLD MARKETS

US indices fell 0.4%-1.3% on Friday as Trump stoked U.S.-China trade fears with the announcement of more tariffs on Thursday while markets digested U.S. employment data released Friday.

China’s foreign ministry responded on Friday by saying the world’s largest economy should give up its illusions, shoulder some responsibility and come back to the right track on resolving the trade war. Beijing would have to take countermeasures if the U.S. was committed to putting more tariffs on Chinese goods, it added.

The U.S. economy added 164,000 jobs in July, largely matching estimate of 165,000. Wages topped expectations, rising 3.2% y-o-y, as against expectation of 0.1% rise.

US crude rose $1.71 or 3.2% to $55.66 a barrel while Brent inched up 0.4% to $61.22.

European markets nosedived 2.3%-3.6%. New British Prime Minister Boris Johnson suffered a blow after the win of pro-European Union Liberal Democrat party  reduced Johnson’s working majority in parliament to just one ahead of an expected tussle with lawmakers over his plan to take Britain out of the European Union with or without an exit agreement on October 31.

For the week, US indices plunged 2.6%-3.9%, the biggest weekly fall of 2019 for S & P 500 and Nasdaq. European markets tumbled 1.9%-4.5%. In Asia, Hang Seng nosedived 5.2% while Nikkei and Shanghai fell 2.6% each. WTI crude fell 1.8% to $55.19 a barrel. Gold gained 2.3% to $1453 an ounce.

AT HOME

After falling more than a percent in the first half, benchmark indices saw a steep rebound to end higher by about a fifth of a percent on Friday. Sensex settled at 37118, up 100 points while Nifty  added 17 points to finish at 10997. BSE mid-cap index gained 0.2% but small-cap index fell 0.4%. BSE Telecom index climbed 3.6%, becoming top gainer among the sectoral indices, followed by 1.1% higher Auto index. Metal and Power indices were the top losers, down 2% and 1.3% respectively.

FIIs net sold stocks and index futures worth Rs 2888 cr and 1015 cr respectively but net bought stock futures worth Rs 1112 cr. DIIs were net buyers to the tune of Rs 2813 cr.

Rupee depreciated 53 paise to end at 69.58/$.

For the week, Sensex and Nifty fell 2% and 2.5% respectively, extending the losing streak to fourth consecutive week.

ITC reported in-line-with-estimates earnings. Revenue rose 5.8% y-o-y to Rs 11503 cr, EBITDA was up 8.7% at Rs 4566 cr, margin improved 50 bps to 39.7% and net profit rose 12.6% to Rs 3174 cr.

SBI's net profit missed estimate and slippages rose while NII was largely in-line. The bank reported profit of Rs 2312 cr as against loss of Rs 4875 cr in the same quarter last year. NII rose 5.2% to Rs 22939 cr. Gross NPA ratio remained unchanged at 7.53% while net NPA ratio rose 6 bps q-o-q to 3.07%. Gross slippages hit a 5-quarter high at Rs 16212 cr as against Rs 7961 cr q-o-q.

HDFC reported its slowest pace of loan growth and worst asset quality in its history. Net profit rose 46.3% to Rs 3204 cr while revenue rose 30.6% to Rs 12990 cr. Loan book rose 11.2% to Rs 4.16 lk cr. Gross NPA ratio rose to 1.29% from 1.22% q-o-q.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.5%-2% and SGX Nifty is suggesting about 70 points lower start for our market.

At the risk of repeating, we have been negative on Nifty ever since 11580 support was breached and have been advising holding on to short positions with a trailing stop-loss.

After 20-month moving average, placed around 11000 was violated, we had given next targets of 10800 and 10700, where the 61.8% and 67% retracement levels of the entire 10004-12103 upmove are placed.

Nifty, on Friday, after touching a low of 10848, rebounded to close at 10997 and is set to open below 10950 today.

10848, the low made last week, is the immedaite support below which, 10800 and 10700, the 61.8% and 67% retracement levels of the entire 10004-12103 upmove, would be next supports to eye.

200-DMA, placed around 11150, would now act as immediate hurdle, with the stop-loss of which, trading shorts can be held on to.

Development on Kashmir will be key focus as National Conference vice-president Omar Abdullah and Peoples Democratic Party president Mehbooba Mufti were placed under house arrest last night and Section 144 Cr. has been imposed in Srinagar. The Union Cabinet is scheduled to meet on today morning at 9.30.