9731, 9889 ARE UPSIDE TARGETS; TRAIL STOP-LOSS TO 9376

9731, 9889 ARE UPSIDE TARGETS; TRAIL STOP-LOSS TO 9376

WORLD MARKETS

Dow ended marginally in the red while S & P 500 and Nasdaq gained 0.5% and 1.3% respectively on Friday. Indices erased initial losses after President Donald Trump signaled no changes to the trade deal with China despite rising tensions.

During a much-awaited news conference, Trump said he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year.

In Europe, FTSES plunged 2.3% while DAX and CAC fell 1.6% each.

For the week, US indices gained 1.8%-3.8%. In Europe, CAC and DAX climbed 5.6% and 4.6% respectively while FTSE rose 1.4%. In Asia, Nikkei soared 7.3%, while Shanghai and Hang Seng gained 1.4% and 0.1% respectively.

AT HOME

After opening lower, Sensex and Nifty saw a sustained northward move through the session to end higher by 0.7% and 1% respectively, extending the winning streak to third straight day and closing at one-month high. Sensex settled at 32424, up 223 points while Nifty added 90 points to finish at 9580. BSE mid-cap and small-cap indices gained 1.9% and 1.1% respectively. BSE Realty and Oil & Gas indices soared 4.5% and 3.4% respectively, becoming top gainers among the sectoral indices while IT and Teck indices were the top losers, down 1% each.

FIIs net bought stocks and stock futures worth RS 1461 cr and 1374 cr respectively but net sold index futures worth Rs 631 cr. DIIs were net buyers to the tune of Rs 967 cr.

Rupee appreciated 13 paise to end at 75.62/$.

For the week, Sensex and Nifty climbed 5.7% and 6% respectively, breaking 3-week losing streak. For the month, Sensex and Nifty fell 3.8% and 2.8% respectively.

India's GDP grew at 3.1% in the fourth quarter of FY20. FY20 growth rate slipped to 4.2%, its lowest in 11 years, from 6.1% in FY19.  FY20 fiscal deficit stood at Rs 9.36 lakh cr vs Rs 7.67 lakh cr (YoY). As a percentage of GDP, fiscal deficit stood at 4.6%, as against finance ministry’s estimate of 3.8%. A separate data showed, the core sector contracted by a record 38% in April as the lockdown hit all eight infrastructure sectors.

As lockdown 4.0 came to an end yesterday, the Centre on Saturday set out a three-phase "unlock" plan that will restrict curbs to containment zones and permit reopening of malls, hotels and restaurants, interstate travel and religious places in keeping with rules to be issued by the health ministry.

OUTLOOK

Data over the weekend showed China's official manufacturing PMI for May came in at 50.6, down from the 50.8 print in April and below the 51.0 level expected. However, the figure was above the 50 level, which separates expansion from contraction.

Today morning, Asian markets are trading with gains of 1%-3.3% with Hang Seng on the top. SGX Nifty is suggesting around 150 points higher start for our market.

Readers would recall that we had turned our view on Nifty bullish after 9178 hurdle was taken out and have been advising holding on to long positions with a trailing stop-loss. On Friday we had said that upon crossover of 9530, 9584, the top made on 13th May, would be the next target/resistance.

Nifty surged to touch a high of 9598 before closing at 9580, achieving this target and vindicating our view.

Today, the benchmark is set to open above 9700.

9731, the upper end of the gap created by gap-down opening on 4th May, is the next upside target to eye. Above 9731, 9889, the top made in April, would be the major target/resistance.

On the way down, 9376, the bottom made on Friday, would work as immediate support, with the stop-loss of which, trading longs can be held on to.

Auto companies will report their May sales figures today.