21850 BELOW 21932; 22330 IS IMMEDIATE HURDLE

 

21850 BELOW 21932; 22330 IS IMMEDIATE HURDLE

 

WORLD MARKETS

 

Dow and S & P 500 rose 0.3% and 0.2% respectively while Nasdaq was little changed on Friday. Dow extended the winning streak to eighth consecutive day.

 

The preliminary May reading for the University of Michigan’s consumer sentiment index came in at 67.4, far below estimate of 76 and marking its lowest reading in about six months. The one-year inflation expectation climbed to 3.5% from 3.2%.

 

Dallas Federal Reserve President Lorie Logan said it was not clear whether monetary policy was tight enough to bring inflation down to the U.S. central bank’s 2% goal, and it was too soon to be cutting interest rates. Atlanta Federal Reserve President Raphael Bostic said the Fed likely remained on track to cut rates this year even if the timing and extent of the policy easing was uncertain. Chicago Federal Reserve President Austan Goolsbee said he believes U.S. monetary policy is “relatively restrictive.”

 

U.S. 10-year treasury yield rose 5 bps to 4.50%. Dollar index inched up 0.1% to 105.31. Gold rose 0.6% to $2360 per ounce.

 

Brent and WTI crude futures both settled down 1.3% at $82.79 and $78.26 a barrel respectively.

 

European markets gained 0.4%-0.9%. The U.K. first quarter GDP rose 0.6% on the previous three months — above the 0.4% estimate and emerging from a recession.

 

The Hang Seng index hit its highest level in 10 months, up 2.3% on reports that the regulators were considering a proposal to exempt individual investors from paying taxes on dividends earned from Hong Kong stocks bought via Stock Connect.

 

For the week, Dow rose 2.2%, its best week since December and its fourth positive week in a row. The S&P 500 and the Nasdaq Composite both posted a third consecutive winning week, rising 1.8% and 1.1%, respectively. European markets gained 2.7%-4.3%. In Asia, Hang Seng and Shanghai rose 3.2% and 1.6% respectively, Nikkei was little changed while Nifty fell 1.9%.

 

AT HOME

 

Benchmark indices gained 0.4% each, recouping a fourth of yesterday's mammoth cuts. Sensex settled at 72664, up 260 points while Nifty added 97 points to finish at 22055. Nifty mid-cap and small-cap indices gained 0.9% and 0.7% respectively. Nifty Metal index was the top gainer among the sectoral indices, up 1.5%, followed by 1.2% higher Oil & Gas and FMCG index. IT and Realty indices were the top losers, down 0.8% and 0.4% respectively.

 

FIIs net sold stocks and index futures worth Rs 2118 cr and 213 cr respectively but net bought stock futures worth Rs 1942 cr. DIIs were net buyers to the tune of Rs 2710 cr.

 

Rupee ended flat at 83.50/$.

 

For the week, Sensex and Nifty fell 1.6% and 1.9% respectively, posting worst weekly cut in nearly two months and also posting worst close in the same duration.

 

OUTLOOK

 

Today morning, Asian markets are down 0.2%-0.7% and GIFT Nifty is suggesting around 50 points lower start for our market.

 

In Friday's report we had said that 21850, around which a trendline adjoining bottoms made in March and April was placed, was the next downside level to eye while 22300 was the immediate hurdle, with the stop-loss of which, trading shorts could be held on to.

 

Nifty rose to end at 22055 and is set to open near 22000 today.

 

21932, the low made last week, coincided with a trendline adjoining bottoms made in February and March and hence is the immediate support to eye, upon breach of which, 21850, around which a trendline adjoining bottoms made in March and April is placed, would be next downside level to eye; On the way up, 34-DMA, placed around 22330, is the important immediate hurdle, with the stop-loss of which, trading shorts can be held on to.

 

For Banknifty, 47313, the low made on Friday, coincided with a trendline adjoining bottoms made since February and hence is the immediate support to eye. If this level breaks, 46579, the bottom made in April, would be next support; On the way up, 48250 is the immediate hurdle on the hourly chart.

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