NIFTY RETREATS AFTER TESTING 11940-11980 TARGET ZONE; TRAIL STOP-LOSS TO 11730

NIFTY RETREATS AFTER TESTING 11940-11980 TARGET ZONE; TRAIL STOP-LOSS TO 11730

WORLD MARKETS

US indices fell 0.1%-0.5% as concerns around trade and the economy on dampened the enthusiasm around strong earnings from Apple and Facebook.

Media report suggested that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report added Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal.

Meanwhile, U.S. President Trump tweeted that a new location for signing the “phase one” trade deal with China “will be announced soon.”

Treasury yields fell across the board a day after the Fed’s announcement. The benchmark 10-year yield dropped around 11 basis points to 1.68%.

Brent futures fell 40 cents to $60.21 a barrel while WTI fell 88 cents to $54.18 on the back of rising U.S. crude oil stocks and weak factory activity in China.

Earlier, official data from China showed factory activity shrank for a sixth straight month in October while growth in the country’s service sector activity was its slowest since February 2016.

European markets fell 0.3%-1.1%.  Euro zone GDP grew 0.2% in the third quarter, slightly better than forecast, while inflation grew 0.7% in October compared to 0.8% in September.

AT HOME

After rising just under a percent, Sensex and Nifty slipped in last hour to end with gains of just 0.2% and 0.3% respectively, nevertheless, extending the winning streak to fifth straight day and Sensex hitting a record intraday high. Sensex settled at 40129, up 77 points while Nifty added 33 points to finish at 11877. BSE mid-cap and small-cap indices climbed 1.1% and 0.9% respectively. BSE Telecom and IT indices jumped 1.9% and 1.7% respectively, becoming top gainers among the sectoral indices while Metal and Energy indices were the top losers, down 0.5% and 0.4% respectively.

FIIs net bought stocks and stock futures worth Rs 1871 cr and 1369 cr but net sold index futures worth Rs 344 cr. DIIs were net sellers to the tune of Rs 651 cr.

Rupee depreciated 4 paise to end at 70.92/$.

For the month, Sensex and Nifty climbed 3.8 and 3.5% respectively, extending the rising streak to second consecutive month.

Yes Bank soared after informing stock exchanges that it has received a binding offer from a global investor for an investment of $1.2 billion in the bank through fresh issuance of equity shares.

India's eight core industries saw output contracting by 5.2% in September, its slowest in six years.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.2%-0.6% and SGX Nifty is suggesting a marginally lower start for our market.

At the risk of repeating, we have been bullish on Nifty ever since 11320 hurdle was taken out and have been advising holding on to long positions with a trailing stop-loss.

After the benchmark achieved 11798 target, we had given 11940-11980 as the next target zone. The benchmark touched a high of 11945 yesterday before closing at 11877, hitting 11940-11980 target zone and vindicating our view.

11981, the top made in July continues to be next target as well as resistance to eye. Once that is taken out, 12103, the top made in June, would be the next major target/hurdle to eye.

Meanwhile, immediate support on the hourly chart has moved up to 11730, with the stop-loss of which, trading longs can be held on to.