A BIG GAP DOWN AWAITS AS GEOPOLITICAL TENSIONS ESCALATE

A BIG GAP DOWN AWAITS AS GEOPOLITICAL TENSIONS ESCALATE

WORLD MARKETS

Dow and S & P 500 fell 0.4% and 0.3% respectively while Nasdaq ended little changed yesterday. US futures however are down nearly a percent and half on news that rockets were fired at an Iraqi airbase that hosts American troops.

The Pentagon has confirmed the report, saying in a statement: “Iran launched more than a dozen ballistic missiles against U.S. military and coalition forces in Iraq. It is clear that these missiles were launched from Iran and targeted at least two Iraqi military bases hosting U.S. military and coalition personnel at Al-Assad and Irbil.”

The news has sparked a surge in oil prices along with gold, which is considered to be a safe-haven asset. U.S. WTI crude futures surged 4.5%, or $2.83, to $65.53, its highest level since April. Spot gold is up 2.07% at $1,606.48 an ounce.

Earlier, In Europe, FTSE and CAC ended flat while DAX rose 0.8%. Euro zone inflation picked up by 1.3% in December as expected, compared to 1.0% in November.

AT HOME

After climbing more than a percent in the initial trade, benchmark indices gave away more than half of the gains through the session to end higher by half a percent, breaking two-day losing streak. Sensex settled at 40869, up 192 points while Nifty added 60 points to finish at 12053. BSE mid-cap and small-cap indices rose 0.6% and 1% respectively. BSE Realty and Basic Materials indices soared 1.8% and 1.5% respectively, becoming top gainers among the sectoral indices while Telecom index slipped 1%, becoming top loser, followed by 0.3% lower Teck and IT indices.

FIIs net sold stocks worth Rs 682 cr but net bought index futures and stock futures worth Rs 1392 cr and 547 cr respectively. DIIs were net buyers to the tune of Rs 311 cr.

Rupee appreciated 10 paise to end at 71.83/$.

Advance estimates for FY20 GDP growth came in at 5%, which would be the lowest rate of growth since 2009.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.5%-2.5% and SGX Nifty is suggesting about 175 points lower start for our market.

In yesterday's report we had said that 12118-12150, the previous support zone, would now act as immediate hurdle.

Nifty, after touching a high of 12152, slipped to end at 12053, vindicating our view. The benchmark is set to open near 11900 today.

As mentioned in our earlier reports, 11832, the low made in December, is the next important support to eye. If 11832 gives way, 11700, where 20-week moving average is placed, would be the next support.

12152, the top made yesterday, is the immediate hurdle.