9390 CONTINUES TO BE IMPORTANT HURDLE; 9050 IMMEDIATE SUPPORT

9390 CONTINUES TO BE IMPORTANT HURDLE; 9050 IMMEDIATE SUPPORT

WORLD MARKETS

After rising nearly a percent and half in the first half, US indices gave away all the gains later to end little changed on reports that suggested that a closely followed experimental drug intended to be used to treat coronavirus delivered disappointing results in an “inconclusive” trial. However, another sharp rebound in oil prices capped the decline in equities.

The Financial Times, citing documents accidentally published by the World Health Organization, reported that Gilead Sciences’ drug remdesivir did not improve coronavirus patients’ condition. The documents cited by the FT referred to a Chinese clinical trial. Meanwhile, Gilead noted that study was “terminated early due to low enrollment,” leaving it “underpowered to enable statistically meaningful conclusions. As such, the study results are inconclusive.”

WTI crude rose 19.7%, or $2.72, to settle at $16.50 per barrel, bringing two-day gains to more than 40%, while Brent gained 96 cents, or 4.7%, to $21.33 as markets eyed continued production cuts and rising U.S.-Iranian tensions.

European market gained 0.9%-1.5%. The IHS Markit PMI dropped to 13.5 in April, hitting record low, from 29.5 in March. France’s April composite PMI dropped to 11.2 from 28.9 in March, marking the lowest reading since the benchmark began in 1998. Germany's reading plunged from 35.0 in March to 17.1 in April, also a record low.

AT HOME

Benchamrk indices climbed nearly a percent and half, extending Wednesday's upmove and closing at the highest level since 13th March, 2020. Sensex settled at 31863, up 483 points while Nifty added 126 points to finish at 9313. BSE mid-cap and small-cap indices gained 0.9% and 1.4% respectively. BSE IT and Teck indices soared 4.8% and 3.9% respectively, becoming top gainers among the sectoral indices while Consumer Durables and FMCG indices were the top losers, down 1.4% and 1.3% respectively.

FIIs net sold stocks and stock futures worth Rs 115 cr and 98 cr respectively but net bought index futures worth Rs 139 cr. DIIs were net buyers to the tune of Rs 338 cr.

Rupee appreciated 60 paise to end at 76.07/$.

Franklin Templeton Mutual Fund has decided to wind up six of its debt schemes, with a combined asset base of Rs 25,856 crore, citing continued redemption pressure and lack of liquidity in the debt markets.

OUTLOOK

Today morning, Asian markets are trading with cut of 0.5%-1.3% and SGX Nifty is suggesting about 100 points lower start for our market.

In yesterday's report we had said that 9230, the upper end of the gap created by Tuesday's gap down opening, continued to be immediate hurdle, upon crossover of which, 9390, the top made on Monday, would be the bigger hurdle to eye.

Nifty crossed 9230 hurdle and surged all the way to 9343 before closing at 9313 but is set to open near 9200 today.

9390, the top made on Monday, which exactly coincided with the 38.2% retracement level of the entire 12430-7511 fall, continues to be important immediate resistance, a crossover of which is required for a fresh upmove. If that happens, 9525, where an upwards sloping trendline adjoining recent tops on daily chart is placed, would be the next target/resistance to eye.

On the way down, 9050 is where a trendline adjoining recent bottoms on the daily chart lands support. Below 9050, 8909, the low made on Tuesday, would be next important support.