NIFTY RETREATS FROM 10550 HURDLE; 10050, 9880 BELOW 10200

NIFTY RETREATS FROM 10550 HURDLE; 10050, 9880 BELOW 10200

WORLD MARKETS

US indices nosedived 2.2%-2.7% on intensifying worries about a coronavirus resurgence. All three benchmarks posted their worst day since June 11 and Nasdaq snapped an eight-day winning streak.

California and Florida reported their biggest daily spikes in new coronavirus cases, while Houston said its intensive-care unit beds are near capacity. New York, New Jersey and Connecticut also ordered visitors from certain hotspot states to quarantine for 14 days.

The International Monetary Fund slashed its economic forecasts again, projecting a contraction of 4.9% in global GDP in 2020, lower than the 3% fall it predicted in April. For 2021, 5.4% growth is expected, which is down 40 bps from April forecast.

Brent crude tumbled $2.29, or 5.5%, to $40.29 a barrel while WTI settled $2.36, or 5.8%, lower at $38.01 per barrel after data showed U.S. crude oil inventories swelled last week by 1.4 million barrels, exceeding expectations for a 299,000-barrel rise.

Meanwhile, according to a notice from the U.S. Trade Representative, The Trump administration is considering new tariffs on $3.1 billion exports from France, Germany, Spain and the U.K.

European markets tumbled 2.9%-3.4%.

AT HOME

After rising nearly eight tenth of a percent, benchmark indices nosedived more than 2% from top of the day to end lower by 1.6% each, snapping four-day winning streak. Sensex settled at 34868, down 561 points while Nifty lost 165 points to finish at 10305. BSE mid-cap and small-cap indices fell 1.1% and 1.2% respectively. Except 0.3% higher FMCG index, all the BSE sectoral indices ended in red with Bankex and Telecom indices leading the losses, down 4.1% and 3.1% respectively.

FIIs net bought stocks and stock futures worth Rs 1767 cr and 460 cr respectively but net sold index futures worth Rs 1051 cr. DIIs were net sellers to the tune of Rs 1525 cr.

Rupee depreciated 7 paise to end at 75.71/$.

IMF said it expects India's GDP to contract 4.5% in FY21, which is 640 bps lower than its own forecast made in April. For FY22, it expects growth of 6%, which is lower by 140 bps from April forecast.

OUTLOOK

Markets in China and Hong Kong are closed today for a holiday. Nikkei is down 1.2% and SGX Nifty is suggesting around 100 points lower start for our market.

Just to reiterate, after 10328 target was achieved, we had been working with next target of 10550, which is the 61.8% retracement level of the entire 12430-7511 fall.

Nifty yesterday touched a high of 10553, achieving this target and vindicating our view. From there it fell sharply to end at 10305 and is set to open near 10200 today.

Immediate support on the hourly chart has moved up to 10200, upon sustained trading below which, 10050 and 9880, the 50% and 67% retracement levels of the recent 9544-10553 upmove, would be next supports to eye.

10553, the top made yesterday, which also coincided with the 61.8% retracement level of the entire 12430-7511 fall, is the important resistance, a crossover of which is required for a fresh upmove.

Exit trading longs if Nifty sustains below 10200.