14645-14620 IS THE SUPPORT ZONE; 14824 IMMEDIATE HURDLE

 

14645-14620 IS THE SUPPORT ZONE; 14824 IMMEDIATE HURDLE

 

WORLD MARKETS

 

US indices plunged 2%-2.7% on Wednesday as inflation data triggered fears of a rate hike. Dow notched its single-worst session since January while S&P 500 had its biggest one-day drop since February. Consumer Price Index spiked 4.2% y-o-y in April, it's fastest pace since 2008. The 10-year yield closed at 1.70%, it’s highest point in over a month.

 

Yesterday, US indices rose 0.7%-1.3%, snapping 3-day losing streak as stocks most exposed to the ongoing recovery rebounded after the Centers for Disease Control and Prevention eased guidelines, saying that in most settings fully vaccinated people don’t need to wear masks indoors or outdoors.

 

Producer Price Index shot up 6.2% y-o-y in April, it's biggest rise since the series was revamped in 2010 and followed a 4.2% jump in March. Jobless claims declined by 34000 to 473000 in the week ended May 8, the expected figure being 490000. The prior week's figure was revised up to 507000.

 

The yield on the benchmark 10-year Treasury note fell about 3 bps to 1.67%, snapping 4-day rising streak. The dollar index, after hitting a high of 90.909, eased to end flat at 90.739. Spot gold was up 0.5% to $1,825 per ounce.

 

Brent crude plunged 3.4%, or $2.33, to $66.99 per barrel while WTI slid $2.32, or 3.5%, to $63.74 a barrel as India’s coronavirus crisis deepened and a key U.S. pipeline resumed operations.

 

In Europe, FTSE fell 0.6% while DAX and CAC rose 0.3% and 0.1% respectively.

 

AT HOME

 

Benchmark indices slipped 1% each, extending the losing streak to second consecutive day. Sensex lost 471 points to settle at 48690 while Nifty finished at 14696, down 154 points. Nifty mid-cap and small-cap indices fell 0.8% and 0.6% respectively.  Except 0.3% higher Auto index, all the BSE sectoral indices ended in red, with Metal index leading the losses, down 3.2%, followed by 1.6% lower Basic Materials index.

 

FIIs net sold stocks, index futures and stock futures worth Rs 1261 cr, 558 cr and 2480 cr respectively. DIIs were net sellers to the tune of Rs 704 cr.

 

Rupee depreciated 8 paise to end at 73.42/$.

 

India's retail inflation, measured by the Consumer Price Index (CPI), eased to 4.29% in April from 5.52% in March. Separately, factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a growth of 22.4% in March.

 

OUTLOOK

 

Today morning, Nikkei and Hang Seng are up 1.3% and 0.3% respectively while Shanghai is little changed. SGX Nifty is trading around 14680, suggesting around 30 points lower start when compared to Wednesday's close of Nifty futures.

 

In Wednesday's report we had said that 14720 continued to be immediate support on the hourly chart, upon breach of which, 14600, where 20-DMA was placed, would be the next downside level to eye.

 

Nifty broke 14720 support and plunged all the way to 14650 before closing at 14696.

 

14645 and 14620 is where 34 and 20-DMA are placed respectively, making 14645-14620 an important support zone. If 14620 breaks, 14416, the bottom made on 3rd May, would be the next support to eye.

 

14824, the top made Wednesday, would act as immediate hurdle.