NIFTY RETREATS AFTER ACHIEVING 9390 TARGET; 8930 IS IMMEDIATE SUPPORT

NIFTY RETREATS AFTER ACHIEVING 9390 TARGET; 8930 IS IMMEDIATE SUPPORT

WORLD MARKETS

US indices fell 1%-2.4%  as an unprecedented plunge in oil prices weighed on market sentiment.

May contract for WTI crude, which expires Today, dropped more than 100% to settle at negative $37.63 per barrel, a bizarre move tied to weak demand outlook and storage capacity issues. The June contract of WTI fell 18% to settle at $20.43. Brent June contract settled 8.9% lower at $25.57 per barrel.

Also, the US Senate failed to reach a deal on the next package to rescue an economy and health care system ravaged by coronavirus pandemic.

Meanwhile, Georgia rolled out aggressive plans to reopen the state’s economy, calling for many businesses to reopen their doors as early as Friday.

Main European markets gained 0.4%-0.6%. The euro zone’s trade surplus with the rest of the world grew to 23 billion euros ($25.1 billion) in February, up from 18.5 billion euros a year before.  IHS Markit revealed that a third of U.K. households had already suffered a drop in income because of the coronavirus crisis, with Britain registering the weakest income reading since the survey began in 2009.

AT HOME

After opening with gains of more than a percent, benchmark indices gave away all the gains through the choppy session to end little changed. Sensex settled at 31648, up 59 points while Nifty lost 5 points to finish at 9261. BSE mid-cap index fell 0.2% while small-cap index rose 0.8%. BSE IT and Energy indices gained 2.1% and 1.3% respectively, becoming top gainers among the sectoral indices while Metal and Telecom indices tumbled 3.3% and 2.6% respectively, becoming top losers.

FIIs net sold stocks and stock futures worth Rs 266 cr and 466 cr respectively but net bought index futures worth Rs 245 cr. DIIs were net sellers to the tune of Rs 789 cr.

Rupee depreciated 15 paise to end at 76.54/$.

Infosys reported mixed set of numbers with revenue and margin missing estimates while net profit was a slight beat. Dollar revenue fell 1.4% q-o-q to 3197 mn, constant currency revenue growth was down 0.8%, margin fell 70 bps to 21.2%, EBIT was down 2.7% at Rs 4927 cr and net profit fell 3.1% to Rs 4321 cr. The company refrained from giving guidance owing to pandemic uncertainty.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.4%-1.6% and SGX Nifty is suggesting about 100 points lower start for our market. The price of the May WTI contract has returned to positive territory, trading at $1.70 a barrel.

Just to reiterate, we had turned our view on Nifty positive after 8678 hurdle was taken out on 7th April and have been advising holding on to long positions with a trailing stop-loss.

After Nifty achieved 9134 target, we had been working with next target of 9390.

Yesterday, Nifty touched a high of 9390, exactly achieving this target. From there, it slipped to end at 9261 and is set to open below 9200 today.

9390, the 38.2% retracement level of the entire 12430-7511 fall, continues to be  immediate resistance to eye, a crossover of which is required for a fresh upmove. If that happens, 9970, the 50% retracement level of the 12430-7511 fall, would be the next major upside target/resistance to eye.

The trendline adjoining recent bottoms on the hourly chart has moved to 8930, which should serve as the stop-loss in existing longs.

ACC will report its quarterly earnings today.