NIFTY RETREATS FROM 10070 HURDLE; 9726 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY RETREATS FROM 10070 HURDLE; 9726 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS

US indices climbed 1.8%-2% after data showed a jump in retail sales in May and as a clinical trial showed promising results for treating coronavirus. A news report that Trump administration is preparing a near $1 trillion infrastructure bill also boosted the sentiment.

May retail sales saw a record 17.7% increase. Trial results announced yesterday showed dexamethasone — a widely available drug — can help critically ill coronavirus patients.

Stocks pared gains after Fed chair Powell, during his semiannual two-day testimony to the Senate banking committee, said, that the central bank would arrange its corporate bond buying based on market conditions and it doesn’t want to “run through the bond market like an elephant.”  Reports saying Beijing will shut down all schools amid a resurgence in coronavirus cases also weighed on the sentiment.

Brent crude rose $1.20, or 3%, to trade at $40.92 per barrel while WTI settled $1.26, or 3.39%, higher at $38.38 per barrel as IEA increased its oil demand forecast for 2020 and as record supply cuts supported.

European markets rose 2.8%-3.5%. U.K. unemployment remained surprisingly unchanged at 3.9% between February and April. Germany’s ZEW economic sentiment survey rose to 63.4 in June from 51.0 in May.

Asia was in focus due to geopolitical tensions. North Korea reportedly destroyed a liaison office with the South while over at the Himalayan border, Indian and Chinese troops clashed as the two sides remain in a standoff.

International Monetary Fund said the global economy is set to see a more significant contraction than it previously forecast.

AT HOME

After gaining more than 2% at the open, benchmark indices plunged nearly 3% from the top but rebounded in late noon trade to finally end about 1% higher. Sensex settled at 33605, up 376 points while Nifty added 100 points to finish at 9914. BSE mid-cap and small-cap indices gained 0.4% and 0.04% respectively. BSE Finance index and Bankex gained 2.4% and 2% respectively, becoming top gainers among the sectoral indices while Telecom and Realty indices fell 1.5% and 0.8% respectively, becoming top losers.

The steep fall happened after Indian Army said that one of its officers and two soldiers were martyred in a violent faceoff with China’s PLA in Galwan Valley region. The death tall was later confirmed at 20 personnel.

FIIs net sold stocks worth Rs 1478 cr but net bought index futures and stock futures worth Rs 114 cr and 369 cr respectively. DIIs were net buyers to the tune of Rs 1162 cr.

Rupee depreciated 19 paise to end at 76.21/$.

OUTLOOK

Today morning, Nikkei is down 0.6% while Hang Seng and Shanghai are up 0.4% and 0.1% respectively. SGX Nifty is suggesting around 50 points lower start for our market.

In yesterday's report we had said that 10070, the 67% retracement level of the recent 10328-9544 fall, continued to be immediate hurdle, while 9726, the low made Monday, which roughly coincided with the 61.8% retracement level of Friday's 9544-9996 pullback, would act as immediate support.

Nifty, after touching a high of 10046 in the initial trade, plunged to 9728 but rebounded from there to end at 9914 and is set to open below 9900 today.

10070, the 67% retracement level of the recent 10328-9544 fall, continues to be immediate hurdle, upon crossover of which, 10328, the top made last week, would be the bigger resistance to eye.

9726, the low made Monday, continues to be immediate support upon breach of which 9544, the low made last week would be important support to eye.