11695 CONTINUES TO BE IMMEDIATE HURDLE; 11490 NEAREST SUPPORT

11695 CONTINUES TO BE IMMEDIATE HURDLE; 11490 NEAREST SUPPORT

WORLD MARKETS

US indices gained 0.2%-0.3% after digesting some more corporate earnings.

Caterpillar closed 1.2% higher, after falling more than 6% in the premarket as results missed estimate. Boeing climbed 1% despite earnings miss as the airplane maker said it will stick to its timeline for the return of the 737 Max. Texas Instrument tumbled 7.5% after posting fourth-quarter guidance well below market estimates.

Brent crude futures gained $1.39, or 2.3% while WTI futures gained $1.49, or 2.7%, to settle at $55.97 per barrel after government data showed a surprise draw in U.S. crude stocks.

In Europe, U.K. lawmakers voted in favor of Prime Minister Boris Johnson’s Brexit plan, but rejected his attempt to fast-track legislation to take the country out of the EU by the end of the month. Johnson said the next step would be to wait for the EU to respond to a request to delay the current Brexit deadline of Oct. 31.

In Europe, FTSE and DAX rose 0.7% and 0.3% respectively but CAC and Italy fell 0.1% and 0.6% respectively.

AT HOME

It was a day of consolidation as benchmark indices ended modestly higher after a choppy session. Sensex added 95 points to settle at 39058 while Nifty finished at 11604, up 16 points. BSE mid-cap index fell 0.1% while Small-cap index rose 0.2%. BSE Telecom index tumbled 3%, becoming top Nifty loser, followed by 1.4% lower Oil & Gas index. Auto and IT indices gained 1.2% each, becoming top gainers.

FIIs net sold stocks and index futures worth Rs 213 cr and 346 cr respectively but net bought stock futures worth Rs 257 cr. DIIs were net sellers to the tune of Rs 137 cr.

Rupee appreciated 2 paise to end at 70.91/$.

L&T's proit and margins beat estimates but revenue was a miss. It reported 13.3% y-o-y rise in Q2 net profit at Rs 2527 cr. Revenue rose 15.2% to Rs 35328 cr, EBITDA was up 13.5% at Rs 4021 cr and margin fell 10 bps to 11.4%. Order inflow grew by 20% y-o-y. The company said it is on track to meet revenue guidance of 12-15% and order inflow guidance of 10-12% for FY20.

HCL Tech's revenue were in-line with estimate but margin was a beat. Company also raised revenue guidance and announced 1:1 bonus.  It reported 19.4% q-o-q rise in net profit at Rs 2651 cr. Revenue rose 6.7% to Rs 17528 cr, EBIT surged 24.6% to Rs 3497 cr and margin expanded 290 bps to 20%. The company raise its FY20 constant currency revenue guidance from 14-16% to 15-17% and maintained EBIT margin guidance at 18.5-19.5%.

Hero Motocorp too beat estimates on all counts with margins hitting a 4 quarter high. Revenue fell 16.7% y-o-y to Rs 875 cr, EBITDA was down 20.1% at Rs 1101 cr, margin contracted 70 bps to 14.5% and net profit fell 10.4% to Rs 874.8 cr.

Bajaj Auto was a beat on all the counts. Operating margin, at 16.6%, improved 120 bps q-o-q and were at a 4 quarter high. Realisation rose 6% q-o-q.

OUTLOOK

Today morning, Nikkei and Hang Seng are up 0.5% and 0.2% respectively while Shanghai is off 0.2%. SGX Nifty is suggesting about 30 points higher start for our market.

After achieving 11695 target last week, Nifty is in a consolidation mode. As we have been mentioning, 11695 continues to be important immediate hurdle, a decisive crossover of which is required for a fresh upmove. If that happens, 11772-11798, the gap created by a gap down opening on 8th July, would be the next target.

Meanwhile, 11490 continues to be immediate support on the hourly chart , with the stop-loss of which, existing longs can be held on to.

Maruti Suzuki and ITC will report their quarterly earnings today.