11488 IS NEXT SUPPORT; 11700 IMMEDIATE HURDLE

11488 IS NEXT SUPPORT; 11700 IMMEDIATE HURDLE

WORLD MARKETS

US indices fell 0.4%-0.8%, with Nasdaq leading the losses, as dip in Apple shares pressured the broader tech sector.

Apple shares fell more than 2% after Rosenblatt Securities downgraded the stock to sell from neutral. Deutsche Bank tumbled 6% after it announced Sunday it will close off its global equities trading business and slash 18,000 jobs as part of a massive restructuring effort to improve profitability.

US oil rose 15 cents or 0.3% to $57.66 a barrel while Brent fell 12 cents or 0.3% to $64.11.

European markets ended flat to modestly lower.

AT HOME

Sensex and Nifty nosedived 2% and 2.1% respectively, suffering the worst single day fall since 11th October 2018, on the back of concerns that the budget proposal would increase tax burden for FPIs. Sensex  lost 792 points to settle at 38720 while Nifty finished at 11558, down 252 points. BSE mid-cap and small-cap indices fell 2% and 2.5% respectively. All the BSE sectoral indices ended in red with Capital Goods and Realty indices leading the losses, down 3.8% and 3.5% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 402 cr, 2902 cr and 898 cr respectively. DIIs were net buyers to the tune of Rs 321 cr.

Rupee depreciated 23 paise to end at 68.65/$.

Media reports suggested that Budget proposal to raise the tax burden on the mega-rich could also affect about 2000 foregin funds which are structured either as trusts or AOP.

OUTLOOK

Today morning, Nikkei is up a third of a percent, Shanghai is little changed while Hang Seng is off 0.2%. SGX Nifty is suggesting a marginally lower start for our market.

In yesterday's report we had said that 11725 is the next downside support below which 11625 would be the next important support to eye.

Nifty plunged all the way to 11523 before closing at 11558.

11488, followed by 11436, which are the 61.8% and 67% retracement levels of the 11108-12103 upmove, are the next supports to eye.

11700, the 38.2% retracement of the recent 11981-11523 fall, is the immediate hurdle.

TCS will report its quarterly earnings today.

11725 IS THE NEXT SUPPORT; 11900 IMMEDIATE HURDLE

11725 IS THE NEXT SUPPORT; 11900 IMMEDIATE HURDLE

WORLD MARKETS

US indices fell 0.1%-0.2%, breaking multi-day winning streak, after stronger-than-expected U.S. nonfarm payrolls report dampened hope for easier Federal Reserve monetary policy.

The U.S. economy added 224,000 jobs in June, as against forecasted figure of 165,000 and a stunningly low figure of 75,000 in May.

Treasury yields jumped on the data. The benchmark 10-year yield traded at 2.05% and the 2-year rate rose to 1.87%. The dollar rose 0.6% against a basket of currencies while Gold futures dropped 1.4% to settle at $1,400.10 per ounce.

Brent oil rose 89 cents or 1.4% to $64.16 a barrel while WTI gained 17 cents or 0.3% to $57.51.

European markets fell 0.5%-0.7%. Geopolitical tensions in the Middle East renewed after British Royal Marines seized a large Iranian oil tanker on Thursday for trying to take oil to Syria in violation of EU sanctions. German industrial orders fell 2.2% in May, after rising slightly in March and April and as against expectation of 0.1% decline.

For the week, US indices gained 1.2%-1.9%. European markets rose 1%-1.7%. In Asia, Nikkei soared 2.2% while Shanghai and Hang Seng were up 1.1% and 0.8% respectively. Indian indices gained about a fourth of a percent. WTI crude fell 0.8% to $57.73 a barrel.

AT HOME

Benchmark indices ended with cuts of a percent and more after digesting Nirmala Sitharaman’s maiden budget, breaking four-day winning streak. Sensex settled at 39513, down 395 points while Nifty lost 135 points to finish at 11811. BSE mid-cap and small-cap indices tumbled 1.4% each.

BSE Metal and Realty indices nosedived 3.8% and 3.6% respectively, becoming top losers among the sectoral indices while FMCG index and Bankex were the top gainers, up 0.2% and 0.1% respectively. Yes Bank collapsed 8.6%, becoming top Nifty loser, followed by 4.7% lower NTPC. Indiabulls Housing and Indusind Bank were the top gainers, up 3.4% and 2.3% respectively. BSE advance-decline ratio stood at 1:2.2.

Nirmala Sitharaman’s budget tried to boost the growth while maintaining fiscal prudence, but markets slipped on the back of some announcement and concern that the revenue targets are ambitious. Here are the details;

Some key estimates/announcements included

·        FY20 gross revenue target at Rs 24.6 lk cr and net tax revenue target at Rs 16.49 lk cr; Non-tax revenue target at Rs 3.13 lk cr

·        FY20 divestment target hiked to Rs 1.05 cr from Rs 90000 cr

·        Aim to get Rs 1.06 lk cr from RBI, Banks’ dividend in FY20 of which RBI dividend is pegged at Rs 90000 cr

·        India to raise part of the gross borrowings in external markets in foreign currencies

·        2% TDS on cash withdrawal exceeding Rs 1 cr in a year from 1 bank account

·        Custom duty on gold and other precious metal increased by 2.5% to 12.5%

On the positive side

·        Fiscal deficit for FY20 has been pegged at 3.3%, lower than the 3.4% figure projected in the interim budget.

·        The budget has provided for Rs 70000 cr for PSU Bank recapitalization.

·        Annual turnover limit for 25% corporate tax raised to Rs 400 cr from Rs 250 cr

·        Additional Rs 1.5 lk deduction on interest paid for affordable housing loans till March 2020

·        Additional income tax deduction of Rs 1.5 lk on interest paid on loans for EVs

·        Government will examine opening up FDI further in aviation, media and insurance

·        Proposes to rationalize & streamline KYC norms for FPIs to make it more investors friendly without compromising integrity of cross-border cap flows

·        1.95 cr houses to be constructed under PMAY from FY20-22

·        To invest Rs 80250 cr for up gradation of roads over five years

·        Government to provide 1-time partial credit guarantee to buy pooled assets of sound NBFCs.

Some announcements which disappointed the market were

·        Mulling minimum public shareholding of 35%, up from present 25%.

·        Special additional excise duty of Rs 1/litre on Petrol and Diesel for road & infra each

·        Buyback tax of 20% extended to listed companies

·        Additional surcharge on higher earners; Effective income tax rates for those earning Rs 2-5 cr  and Rs 5 cr and above to go up by around 3% and 7% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 89 cr, 673 cr and 67 cr respectively. DIIs were net buyers to the tune of Rs 275 cr.

Rupee appreciated 7 paise to end at 68.42/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.9%-1.4% and SGX Nifty is suggesting about 50 points lower start for our market.

readers would recall that after Nifty took out 11850 hurdle, we had given upside targets of 11911, 12000 and 12103 and had been advising holding on to long positions with a trailing stop-loss. On Friday, we had advised trailing the stop-loss to 11860.

Nifty, after touching a high of 11981, slipped, broke 11860 support and plunged all the way to 11798 before closing at 11811 and is set to open below Friday's low today.

11725, where a trendline adjoining recent bottoms on hourly chart is placed, is the next downside support to eye. If that breaks, 11625, the bottom made in June, would be the next important support to eye.

Immediate hurdle on the hourly chart is placed around 11900, with the stop-loss of which, trading shorts should be held on to.

ALL EYES ON BUDGET

ALL EYES ON BUDGET

WORLD MARKETS

US markets were shut yesterday for the Independence Day holiday.

US oil fell 47 cents or 0.8% to $56.87 a barrel while Brent fell 31 cents or 0.5% to $63.51.

In Europe, FTSE fell 0.1% while DAX and CAC rose 0.1% and 0.03% respectively. Italy climbed 1% as it averted European Union disciplinary action over its public finances after convincing the European Commission that measures submitted this week would help bring its growing debt into line with EU fiscal rules.

Tensions between Washington and Tehran continued to escalate with US President Trump telling Iran via Twitter that threats can “come back to bite you ” after Iranian President Hassan Rouhani announced that Iran would increase its uranium enrichment.

AT HOME

Benchmark indices ended higher by a fifth of  a percent after a range bound buy choppy session, extending the winning streak to fourth straight day. Sensex added 68 points to settle at 39908 while Nifty finished at 11946, up 30 points. BSE mid-cap index however fell 0.2% while small-cap index gained 0.1%. BSE Consumer Durable and Metal indices tumbled 1.6% and 1.1% respectively, becoming top losers among the sectoral indices while Telecom index climbed 1.5%, becoming top gainer, followed by 0.9% higher Realty index.

FIIs net sold stocks and index futures worth Rs 29 cr and 4 cr respectively but net bought stock futures worth Rs 313 cr. DIIs were net buyers to the tune of Rs 59 cr.

Rupee closed at 68.50/$, appreciating 41 paise compared to previous close.

Finance Minister Nirmala Sitharaman tabled Economic Survey in the Parliament. Broadly, the survey says the key to become a $5 trillion economy by 2025 is a virtuous cycle of saving, investment, exports, etc. It says private investments are extremely important to accelerate and sustain the growth, but the challenge the economy is facing at the moment is lower savings to GDP ratio. It projected Indian economy to expand at 7% this fiscal as against 6.8% growth clocked in last fiscal. The survey also said that investment rate seems to have bottomed out and bet for higher GDP growth in FY20 on stable macroeconomic condition. It added that accommodative MPC policy will help cut real lending rates.

OUTLOOK

Today morning, Asian markets are trading little changed and SGX Nifty is suggesting a flattish start for our market.

Big event to watch out today would be maiden budget of Finance Minister Nirmala Sitharaman. Key thing to watch out in the budget would be balancing between growth and fiscal prudence. India's economic growth fell to 5.8% in January-March quarter, the lowest in 20 quarters while FY19 GDP growth stood at 6.8%, its lowest in the last 5 years.

Obviously, to boost the growth, government needs to spend more. But unfortunately, revenue growth has been disappointing. FY19 tax revenue growth was just 8% against estimate of 17%. So, it is expected that there would be some compromise with the fiscal deficit and the same for the FY19-20 can go up to 3.5% or may be even 3.6% as against 3.4% intended originally.

Markets will also watch out for the internals of fiscal deficit calculation, viz. revenue growth and expenditure to guage the credibility of fiscal deficit figures. Also will be watched gross borrowing figures.

It is expected that to boost the growth there will be focus on infrastructure, housing, agri/rural income growth and consumption.

It remains to be seen whether income tax slab is tweaked or additional deductions are allowed to provide more money in the hands of the people, which in turn will boost demand and prompt industry to raise production.

Another area to watch out would be corporate tax rate. There is also pressure on the Finance Minister to lower the corporate tax for remaining one per cent of the assesses i.e. big companies. Such a move will definitely encourage investment.

There is also demand for reviewing the long-term capital gain tax (LTCG) and dividend distribution tax (DDT). While chances of relief on the same are less, markets would cheer the move if it comes.

Coming to Nifty levels, readers would recall that after Nifty took out 11850 hurdle, we had given upside targets of 11911, 12000 and 12103 and have been advising holding on to long positions with a trailing stop-loss.

Nifty, after achieving 11911 target on Tuesday, touched a high of 11969 yesterday before closing at 11946, moving towards 12000 mark.

12000, followed by 12103, which are the tops made on 11 and 3 June respectively, continue to be upside targets to eye.

Immediate support on the hourly chart has moved up to 11860, with the stop-loss of which, trading longs should be held on to.

12000 ABOVE 11945; TRAIL STOP-LOSS TO 11820

12000 ABOVE 11945; TRAIL STOP-LOSS TO 11820

WORLD MARKETS

US indices gained 0.7%-0.8% to hit record highs after weaker-than-expected economic data raised expectation of a rate cut from the Fed later this month.

Data from ADP and Moody's Analytics showed private payrolls increased by 102000 in June, the expected figure being 135,000.

A tweet from President Trump calling for easier monetary policy added to expectations of easier Fed policy. Trump said the U.S. should “match” monetary policies from China and Europe, noting they are “playing big currency manipulation game and pumping money into their system in order to compete with USA.”

10-year Treasury yield fell to 1.938 before recovering to 1.956, its lowest level since 2016.

Brent crude rose $1.42 or 2.3% to $63.82 a barrel while US oil rose $1.09 or 1.9% to $57.34.

In Europe FTSE, DAX and CAC rose 0.7%-0.8% while Italy surged 2.4%. European Union leaders agreed on Tuesday to nominate International Monetary Fund (IMF) Managing Director Christine Lagarde as the new head of the European Central Bank (ECB).

AT HOME

It was a day of consolidation as benchmark indices ended marginally higher after trading in a narrow range. Sensex settled at 39839, up 22 points while Nifty added 6 points to finish at 11916. BSE mid-cap and small-cap indices gained 0.1% and 0.3% respectively. BSE Realty and Capital Goods indices gained 0.8% and 0.6% respectively, becoming top gainers among the sectoral indices while IT and Teck indices were the top losers, down 0.9% and 0.7% respectively.

FIIs net sold stocks worth Rs 390 cr but net bought index futures and stock futures worth Rs 7 cr and 461 cr respectively. DIIs were net buyers to the tune of Rs 288 cr.

Rupee appreciated 1 paise to end at 68.91/$.

India's June Nikkei Services PMI fell to 49.6 from 50.2 in May, slipping into contraction territory for the first time since May 2018.

OUTLOOK

Today morning, Asian markets are trading with modest gains and SGX Nifty is suggesting a marginally higher start for our market.

Readers would recall that we had turned our view on Nifty positive after 10850 hurdle was taken out and had have been working with targets of 12000 and 12100 after 11911 target was achieved.

Nifty yesterday touched a high of 11945 before closing at 11916 and is set to open

12000 and 12103, the tops made on 11 and 3 June respectively, continue to be upside targets to eye.

34-DMA, which has now moved up to 11820, will act as the immediate support and traders are advised to continue holding the long positions with the stop-loss of the same.

A day ahead of the budget, economic survey will be tabled in the Parliament today.

Markets in the US will remain shut today for the Independence Day holiday.

12000, 12103 UPSIDE TARGETS TO EYE; TRAIL STOP-LOSS TO 11800

12000, 12103 UPSIDE TARGETS TO EYE; TRAIL STOP-LOSS TO 11800

WORLD MARKETS

US indices rose 0.2%-0.3% on optimism over US-China trade deal, but gains were capped by concerns that the U.S. could bring its tariff threat to Europe.

Trump said Monday that trade talks with China were back underway after the leaders met on the sidelines of the G-20 summit in Osaka, but added that any deal would need to be somewhat tilted in Washington’s favor. On the flip side, Washington on Monday threatened to impose tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.

Bank shares fell as the benchmark 10-year yield traded around 1.97% while the 2-year rate fell to 1.76%.

Brent crude fell $2.61, or 4.01%, to $62.45 a barrel and U.S. West Texas Intermediate (WTI) crude fell $2.84, or 4.8%, to $56.25 on demand worries. Gold jumped 1.5% to $1,405.22 per ounce as U.S. Treasury yields fell.

European markets gained upto 0.8% with FTSE on the top. British 10-year government bond yield to fell to its lowest level since October 2016 after data showed that U.K. construction activity suffered its sharpest downturn in over a decade in June on the back of rising Brexit concern.  German retail sales were down 0.6% for the month versus estimate of +0.5%. The 10-year German Bund yield dropped to a new all-time low of -0.363% before recovering.

AT HOME

After falling about four tenth of a percent, benchmark indices reversed to end higher by four tenth of a percent, extending the winning streak to second day. Sensex settled at 39816, up 130 points while Nifty added 44 points to finish at 11910. BSE mid-cap index too gained 0.4% but small-cap index ended flat. BSE Oil & Gas and Energy indices gained 1.1% and 0.9% respectively, becoming top gainers among the sectoral indices while Realty index tumbled 1.8%, becoming top loser, followed by 0.6% lower Healthcare index.

FIIs net sold stocks and index futures worth Rs 512 cr and 125 cr respectively but net bought stock futures worth Rs 359 cr. DIIs were net buyers to the tune of Rs 141 cr.

Rupee appreciated 2 paise to end at 68.92/$.

Yes Bank nosedived on reports that Radius, a Mumbai-based Developer, has defaulted on scheduled interest payments on a Rs 1,200-crore loan from the Bank.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.5%-0.8% but SGX Nifty is suggesting about 15 points higher start for our market.

In yesterday's report we had reiterated our positive bias on the Nifty and had said that long positions should be held with the stop-loss of 11775. We had also said that once 11911, the top made last week is taken out, 12000 and 12103, the previous tops on daily chart, would be subsequent targets to eye.

Nifty touched a high of 11917 before closing at 11910 and is set to open higher today.

12000, followed by 12103, the tops made on 11 and 3 June respectively, continue to be upside targets to eye.

34-DMA, which has now moved up to 11800, will act as the immediate support and traders are advised to continue holding the long positions with the stop-loss of the same.

12000 ABOVE 11911; 11775 IS THE IMMEDIATE SUPPORT

12000 ABOVE 11911; 11775 IS THE IMMEDIATE SUPPORT

WORLD MARKETS

US indices gained 0.4%-1.1%, with the S & P 500 hitting a record closing high, after the U.S. and China agreed to hold off on slapping additional tariffs on their products in an effort to resume trade talks.

U.S. will also ease restrictions on American companies from selling products to Huawei, a giant telecommunications company from China. The U.S. president also said China would “buy farm product.”

US oil rose 1.1% to $59.09 a barrel while Brent rose 0.5% to $65.07 after OPEC+ announced it will extend production cuts for the next nine months.

European markets rose 0.5%-1%. Data showed euro zone factory activity contracted in June, with German activity slowing for the sixth month in a row, Italy falling for its ninth consecutive month, and Spain shrinking at its fastest rate in six years. The U.K.’s June manufacturing PMI reading fell to its lowest since October 2012.

AT HOME

After a gap up opening on the back of positive global cues, benchmark indices added some more weight through the session to end with gains of seven tenth of a percent, breaking two-day losing streak. Sensex added 291 points to settle at 39686 while Nifty finished at 11865, up 76 points. BSE mid-cap and small-cap indices rose 0.5% and 0.3% respectively. BSE Realty index climbed 2.6%, becoming top gainer among the sectoral indices, followed by 1.2% higher Auto index.

Rupee appreciated 7 paise to end at 68.94/$.

FIIs net bought stocks and index futures worth Rs 427 cr and 447 cr respectively but net sold stock futures worth Rs 325 cr. DIIs were net sellers to the tune of Rs 51 cr.

GST collection for June stood at Rs 99939 cr, slipping below 1 lakh cr mark for the first time after February, 2019.

India's June Nikkei Manufacturing PMI slowed to 52.1 from 52.7 in May.

Hero Motocorp sales fell 12.5% to 6.16 lakh units. Tata Motors sales fell 14% to 49073 units. TVS Motors sold 2.97 lakh units, a fall of 5%. Eicher Motor's CV sales for June fell 28.5% y-o-y to 4569 units while motor cycle sales fell 22% to 58339 units. Escorts tractor sales fell 10.2% to 8960 units. Maruti reported 14% dip at 1.24 lakh units. Ashok Leyland sold 12810 units, a dip of 19%. M & M tractor sales fell 18% to 33094 units while auto sales fell 6% to 42547 units. Bajaj Auto sales were flat at 4.04 lakh units.

OUTLOOK

Today morning, Hang Seng, which was shut yesterday, is up nearly a percent, Nikkei is little changed and Shanghai is down 0.2%. SGX Nifty is suggesting about 15 points higher start for our market.

In yesterday's report we had said that 11911, the top made last week, is the immediate hurdle and had advised holding on to long positions with the stop-loss of 11750, where 34-DMA was placed.

Nifty yesterday rose 76 points to close at 11865 and is set to open higher today.

11911, the top made last week, continue to be immediate upside target/resistance to eye, upon crossover of which, 12000 and 12103, the previous tops on daily chart, would be subsequent targets to eye.

34-DMA is now coinciding with the 11775 bottom made made on Friday, which makes 11775 immediate support. If that breaks, 11650, the bottom made last week, would be the next support to eye.

Traders are advised to hold long positions with the stop-loss of 11775.

34-DMA LANDS SUPPORT AT 11750; 11911 IS IMMEDIATE HURDLE

34-DMA LANDS SUPPORT AT 11750; 11911 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices gained 0.3%-0.6%, boosted by bank shares, and looking forward to a key meeting between US President Donald Trump and Chinese President Xi Jinping

J.P. Morgan Chase jumped 2.7% while Citigroup, Bank of America, Goldman Sachs and Wells Fargo all closed more than 2% higher after they passed the Fed’s annual stress test and got approval to boost dividends and share repurchase programs.

US oil fell 96 cents or 1.6% to $58.47 a barrel while Brent after the remaining parties to the Iran nuclear deal vowed to help normalize trade with the Middle Eastern nation.

European markets gained 0.3%-1%. Euro zone inflation was stable at 1.2% in June.

For the week, US indices fell 0.3%-0.4%. European markets gained 0.2%-0.5%. In Asia, Shanghai fell 0.8% While Nikkei and Hang Seng rose 0.1% and 0.2% respectively. Indian indices gained about half a percent. WTI crude gained 1.3%.

AT HOME

Benchmark indices fell half a percent on Friday, extending the losing streak to second straight day. Sensex lost 191 points to settle at 39394 while Nifty finished at 11788, down 52 points.  BSE mid-cap and small-cap indices outperformed yet again, falling 0.3% and 0.1% respectively. BSE Energy and Metal indices tumbled 1.5% and 1.1% respectively, becoming top losers among the sectoral indices while Realty and Consumer Durable indices gained 0.6% and 0.4% respectively, becoming top gainers.

FIIs net sold stocks and index futures worth Rs 514 cr and 436 cr respectively but net bought stock futures worth Rs 361 cr. DIIs were net buyers to the tune of Rs 182 cr.

Rupee appreciated 5 paise to end at 69.01/$, the strongest level since April 1, marking a two-month high.

For the week, Sensex and Nifty gained half a percent each, breaking three-week losing streak.

Data released on Friday showed India’s current account deficit (CAD) widened to $57.2 billion, or 2.1% of GDP, in FY19 from 1.8% a year ago. However, in the quarter ended March 2019, the deficit narrowed to 0.7% of the GDP at $4.6 billion, compared with 2.7% or $17.7 billion, in the October-December period

Meanwhile, fiscal deficit during the first two months of the current fiscal stood at Rs 3.66 trillion, which is 52% of the budged estimate for the full year.

OUTLOOK

US President Trump and Chinese President Xi, on Saturday, said that they did not plan to levy any new tariffs against each other’s products at the present time.  Trump also said he will be reversing his government’s decision to ban American companies from selling products to the Chinese telecommunications behemoth, Huawei.

Meanwhile, data released Sunday showed China's manufacturing PMI remained unchanged at 49.4 in June, but was lower than the expected 49.5 figure.

Today morning, Asian markets are trading with gains of 1.2%-1.7% and SGX Nifty is suggesting a marginally  higher start for our market.

In Friday's report we had said that "Immediate support on the hourly chart has moved up to 11780, with the stop-loss of which, trading longs should be held on to".

Nifty, after touching a low of 11775 closed at 11788 and is set to open around 11800 today.

34-DMA, placed around 11750, is the immediate support to eye. If that breaks, 11650, the bottom made last week, would be the next support.

11911, the top made last week, would be the immediate hurdle to eye upon crossover of which 12000, the top made on 11^th June, would be the next target.

Meanwhile, traders are advised to hold long positions with the stop-loss of 11750.

Auto companies will report June sales figures today.