NIFTY NEARLY ACHIEVES 11883 TARGET; 12050 IS IMMEDIATE HURDLE

NIFTY NEARLY ACHIEVES 11883 TARGET; 12050 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices soared 0.9%-1.2% on Friday on the back of strong U.S. employment report.

The U.S. economy added 266,000 jobs in November, easily beating expected figure of 187,000. The unemployment rate fell to 3.5%, matching its lowest level since 1969.

Treasury yields climbed to their session highs after the data with the benchmark 10-year yield trading at 1.84% while the 2-year rate was at 1.62%. Gold futures shed 1.2% to settle at $1,465.10 per ounce.

WTI crude futures gained 1.3%, to settle at $59.20 a barrel while Brent gained 1.6% to settle at $64.37 as OPEC and its allies agreed to deepen oil production cuts to 500,000 barrels a day through to March 2020. This brings the total production cut to 1.7 million barrels a day.

European markets gained 0.9%-1.5%.  Germany’s industrial output for October fell 1.7% against a market expectation of a 0.1% increase in activity. In France, data showed a drop of 4.73 billion euros in its trade deficit.

For the week, Dow and Nasdaq fell 0.1% each while S & P 500 was up 0.2%. In Europe, FTSE tumbled 1.4% while DAX and CAC eased 0.5% each. In Asia, Shanghai climbed 1.4%, Hang Seng and Nikkei rose 0.6% and 0.3% respectively but India fell nearly a percent.

AT HOME

Bechmark indices plunged eight tenth of a percent to close at the lowest level in two weeks. Sensex lost 334 points to finish at 40445 while Nifty finished at 11921, down 97 points. BSE mid-cap and small-cap indices slipped 1.3% and 0.9% respectively. Except 0.2% higher IT index, all the BSE sectoral indices ended in red with Auto index leading the losses, down 1.8%, followed by 1.3% lower Realty, Finance and Utilities indices.

FIIs net sold stocks and stock futures worth Rs 868 cr and 355 cr respectively but net bought index futures worth Rs 240 cr. DIIs were net buyers worth Rs 211 cr.

Rupee appreciated 9 paise to end at 71.19/$.

Yes Bank tumbled after Moody's Investors Service downgraded the private lender’s credit rating and also assigned a 'negative outlook' to the company.

For the week, Sensex and Nifty lost 0.8% and 1.1% respectively, with Sensex breaking 5-week winning streak.

OUTLOOK

China’s overseas shipments dropped 1.1% year-on-year in November, below the 1.0% expansion expected.  Imports however rose 0.3% — exceeding projections for a 1.8% decline.

Today morning, Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 20 points lower start for our market.

Readers would recall that after Nifty broke 20-DMA support placed around 11975, we were working with next downside target of 11883, which was the bottom made on 22nd November.

Nifty, on Friday, touched a low of 11888, before closing at 11921, nearly achieving 11883 target mentioned above and vindicating our view.

11883 continues to be important immediate support, upon breach of which, 11802, the bottom made in November, would be the next support.

12050 is the immediate hurdle on the hourly chart above which 12158, the top made in November, would be the bigger hurdle to eye.