MARKETS SET TO CHEER EXIT POLLS WITH A GAP-UP; TRAIL STOP-LOSS TO 11426

MARKETS SET TO CHEER EXIT POLLS WITH A GAP-UP; TRAIL STOP-LOSS TO 11426

WORLD MARKETS

US indices fell 0.4%-1% on Friday on reports that trade talks between China and the U.S. have stalled.

Media reports suggested that scheduling discussions for further trade talks have been put on hold since the Trump administration has increased scrutiny of Chinese telecom companies.

Deere shares fell more than 7.5% after reporting weaker-than-expected earnings. The company cited the ongoing trade war for their disappointing results.

US oil fell 11 cents to $62.76 a barrel while Brent fell 41 cents to $72.21.

The Shanghai Composite dropped 2.5% and posted its longest weekly losing streak since July 2018.

European markets fell 0.1%-0.6%. Sterling fell to its lowest in four months after Brexit talks between the U.K. Conservative government and main opposition Labour Party broke down. Meanwhile, the Trump administration confirmed that it will delay tariffs on European auto imports for up to six months, which EU finance chiefs dubbed a “wise decision.”

AT HOME

Bulls extended the lead as benchmark indices soared a percent and fourth ahead of the last phase to 2019 general election. Sensex added 537 points to settle at 37930 while Nifty finished at 11407, up 150 points. BSE mid-cap and small-cap indices gained 1.1% and 0.5% respectively. BSE Auto and FMCG indices soared 2.4% and 2.3% respectively, becoming top gainers among the sectoral indices while Healthcare and IT indices were the top losers, down 1% and 0.8% respectively.

FIIs net sold stocks worth Rs 1058 cr but net bought index futures and stock futures worth Rs 311 cr and 592 cr respectively. DIIs were net buyers to the tune of Rs 1810 cr.

Rupee depreciated 19 paise to end at 70.22/$.

For the week, Sensex and Nifty gained 1.2% and 1.1% respectively.

OUTLOOK

Most exit polls, released yesterday evening, have predicated a clear majority to BJP-led NDA with nearly or above 300 seats, out of total 542 Lok Sabha seats. Meanwhile, reports over the weekend suggested that Alphabet’s Google has suspended some business with Chinese telecommunications giant Huawei.

Today morning, Nikkei is up about half a percent while Shanghai and Hang Seng are off 0.5% and 0.1% respectively. SGX Nifty is suggesting more than 200 points higher opening for our market.

In Friday's report we had mentioned that upon crossover of 11320-11350 resistance zone, 20-DMA, placed around 11500, would be the next target.

Nifty crossed this resistance zone and surged all the way to 11426 before closing at 11407 and is set to open above 11600 today.

11650, where a trendline adjoining recent tops on the daily chart is placed, is the next target/resistance to eye. Once that is taken out decisively, 11856, the top made last month, would be the next target.

11426, the top made on Friday, which would also be the lower end of the gap created by today's gap-up opening, would now serve as immediate support, with the stop-loss of which, existing longs can be held on to.

Tata Motors will report its quarterly earnings today.

AWAITING EXIT POLLS

AWAITING EXIT POLLS

WORLD MARKETS

US indices gained 0.8%-1%, extending the winning streak to third consecutive day, on the back of better-than-expected earnings and U.S. economic data.

Walmart and Cisco rose after reporting better-than-expected quarterly earnings. Bank shares rose as the benchmark 10-year Treasury yield climbed back above 2.4% on stronger-than-forecast data.

Housing starts for April topped expectations while weekly jobless claims dropped more than expected.

Situation worsened on US-China relation front. U.S. President Trump declared on Wednesday a national emergency over threats against American technology. In addition, the U.S. Department of Commerce announced the addition of Huawei Technologies and its affiliates to the Bureau of Industry and Security (BIS) Entity List, making it more difficult for the Chinese telecom giant to conduct business with U.S. companies.

US oil rose 1.4% to $62.87 a barrel while Brent rose 1.2% to $72.62 as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its oil infrastructure.

European markets rose 0.8%-1.7%

AT HOME

Bulls came back with a vengeance as benchmark indices soared in late noon trade to end with gains of eight to nine tenth of a percent. Sensex settled 278 points higher at 37393 while Nifty finished at 11257, up 100 points. BSE mid-cap and small-cap indices gained quarter of a percent each. BSE Basic Material and Oil & Gas indices climbed 1.5% each, becoming top gainers among the sectoral indices while Telecom index tumbled 1.2%, becoming top loser, followed by 0.1% lower Healthcare index.

FIIs net sold stocks and index futures worth Rs 953 cr and 820 cr respectively but net bought stock futures worth Rs 421 cr. DIIs were net buyers to the tune of Rs 948 cr.

Rupee appreciated 31 paise to end at 70.02/$.

Bajaj Finance reported strong set of earnings along with stable asset quality. NII climbed 50% y-o-y to Rs 3395 cr while net profit soared 57% to Rs 1176 cr. Gross NPA ratio improved 1 bps q-o-q to 1.54% while net NPA ratio rose 1 bps to 0.63%.

OUTLOOK

Today morning, Nikkei and Hang Seng are up 1.2% and 0.1% respectively while Shanghai is off 0.4%. SGX Nifty is suggesting a flattish start for our market.

For past couple of sessions we have been mentioning that 11070-11000 is the important support zone for Nifty while 11320-11350 is the immediate resistance zone.

Nifty yesterday jumped to touch a high of 11281 before closing at 11257 and is set to open flat today.

11320-11350 continues to be resistance zone, a crossover of which will confirm a "Buy" on the hourly chart and would pave the way for further upmove. 20-DMA, placed around 11500, would be the next target if that happens.

11070-11000 continues to be important support zone. If that gets breached, 10585, the bottom made in February, would be the next support.

Bajaj Auto and Dr Reddy will report their quarterly earnings today.

Last phase of general election will take place on Sunday, 19th February. Exit polls will be out in the evening and markets will react to them on Monday.

NIFTY RETREATS FROM THE RESISTANCE; 11070-11000 CONTINUES TO BE SUPPORT ZONE

NIFTY RETREATS FROM THE RESISTANCE; 11070-11000 CONTINUES TO BE SUPPORT ZONE

WORLD MARKETS

Dow and S & P 500 rose about half a percent while Nasdaq climbed 1.1% on news that President Donald Trump plans to delay the implementation of auto tariffs by upto six months.

Stocks initially fell after the release of weaker-than-expected economic data stoked fears that the U.S.-China trade war is dragging down global economic growth. U.S. retail sales fell 0.2% in April, as against expected rise of 0.2%. Earlier data released in China showed industrial production rose by lower-than-expected 5.4% y-o-y in April, notching the slowest pace of growth since May 2003. Chinese retail sales also disappointed.

US oil rose 24 cents to $62.02 a barrel and Brent rose 53 cents to $71.77 a barrel.

Main European markets gained 0.6%-0.9%.

AT HOME

Bears were back after a day's break as benchmark indices nosedived more than a percent from the top of the day to end lower by about six tenth of a percent. Sensex settled at 37114, down 203 points while Nifty lost 65 points to finish at 11157. BSE mid-cap and small-cap indices fell 0.7% and 0.4% respectively. BSE Metal and Telecom indices tumbled 2.1% and 2% respectively, becoming top losers among the sectoral indices while Realty index was the top gainer, up 0.2%, followed by 0.1% higher IT and FMCG indices.

FIIs net sold stocks worth Rs 1142 cr but net bought index futures and stock futures worth Rs 276 cr and 312 cr respectively. DIIs were net buyers to the tune of Rs 672 cr.

Rupee appreciated 10 paise to end at 70.33/$.

India's April trade deficit hit a 5-month high at $15 bn, up from $11 bn in March, as exports dipped.

OUTLOOK

Today morning, Nikkei is down nearly a percent while Hang Seng and Shanghai are off 0.4% and 0.1% respectively. SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had said that 11320-11350 was the immediate resistance zone, a crossover of which is required for a further upmove.

Nifty, after touching a high of 11287, plunged to end at 11157, vindicating our view.

11070-11000 continue to be crucial support zone to eye as 11070 and 11000 are the 61.8% and 67%  retracement levels of the entire 10585-11856 upmove while 11036 is where 200-DMA is placed.

11320-11350 continues to be immediate resistance zone.

Hindalco, Bajaj Finance and Bajaj Finserve will report their quarterly earnings today.

NIFTY REBOUNDS FROM THE VICINITY OF 11070 SUPPORT; 11320-11350 IS THE IMMEDIATE RESISTANCE ZONE

NIFTY REBOUNDS FROM THE VICINITY OF 11070 SUPPORT; 11320-11350 IS THE IMMEDIATE RESISTANCE ZONE

WORLD MARKETS

Dow and S & P 500 rose 0.8% each while Nasdaq climbed 1.1%, recouping some of the steep losses suffered in the previous session.

Trump tweeted yesterday that the U.S. is in a “much better position now than any deal we could have made,” noting that “billions of dollars” are returning to the U.S. Trump also said he thinks the U.S. is winning the country’s trade dispute with China.

Brent oil jumped 1.7% to $71.39 a barrel and WTI 1.2% to $61.86 on reports of a drone attack at oil pumping stations in Saudi Arabia.

European markets gained 1%-1.5%.

AT HOME

After trading in a narrow range in first half, benchmark indices shot up in the second half to end with gains of six tenth of a percent, breaking nine-day losing streak. Sensex settled at 37318, up 227 points while Nifty added 73 points to finish at 11222. BSE mid-cap and small-cap indices gained 0.6% and 0.3% respectively. Except 1.2% and 0.8% lower IT and Teck indices respectively, all the BSE sectoral indices ended in green with Telecom and Energy indices leading the tally, up 2.8% and 1.7% respectively.

FIIs net sold stocks and index futures worth Rs 2012 cr and 702 cr respectively but net bought stock futures worth Rs 409 cr. DIIs were net buyers to the tune of Rs 2243 cr.

Rupee appreciated 10 paise to end at 70.43/$.

India's April WPI inflation came in at 3.07%, down from 3.18% in March. Core WPI eased to 1.9% from 2.55%.

OUTLOOK

Today morning, Nikkei is down 0.2% while Hang Seng and Shanghai are up 0.2% and 0.7% respectively. SGX Nifty is suggesting a marginally higher start for our market.

We were working with downside target of 11070 after Nifty achieved 11220 target. Yesterday, Nifty, after touching a low of 11108, rebounded sharply to end at 11222 and is set to open higher today.

11320-11350 is the immediate resistance zone, a crossover of which will generate a "buy" on the hourly chart and if that happens, 34-DMA, placed around 11550, would be the next target.

11070, the 61.8% retracement level of the entire 10585-11856 upmove, continues to be downside support.

Lupin will report its quarterly earnings today.

11070 IS THE NEXT TARGET; TRAIL STOP-LOSS TO 11350

11070 IS THE NEXT TARGET; TRAIL STOP-LOSS TO 11350

WORLD MARKETS

Dow and S & P 500 plunged 2.4% each while Nasdaq nosedived 3.4% after China decided to raise tariffs on some U.S. goods in the ongoing trade war.

China will hike tariffs on $60 billion worth of U.S. imports, starting on June 1. The goods targeted include a broad range of agricultural products. This comes after Trump raised tariffs on Chinese imports last week.

Trump tweeted yesterday that China will be “hurt very badly if you don’t make a trade deal,” noting that companies would be forced to leave the country without an agreement.

Bonds rose on safe haven buying and the benchmark 10-year Treasury yield fell to 2.39% while the 2-year rate dipped to 2.17%.

US oil fell 1%, or 62 cents to $61.04 while Brent fell 42 cents to $70.20.

European markets fell 0.6%-1.5%.

AT HOME

Sensex and Nifty nosedived 1% and 1.2% respectively, extending the losing streak to ninth consecutive day and closing at fresh two-month low. Sensex settled at 37090, down 372 points while Nifty lost 130 points to finish at 11148. BSE mid-cap and small-cap indices nosedived 1.8% and 2.2% respectively. Except a 0.1% higher IT index, all the BSE sectoral indices ended in red with Healthcare and Capital Goods indices leading the losses, down 3.5% and 2.5% respectively.

FIIs net sold stocks and index futures worth Rs 1056 cr and 138 cr respectively but net bought stock futures worth Rs 186 cr. DIIs were net buyers to the tune of Rs 1058 cr.

Rupee plunged 62 paise to end at 70.53/$, suffering the worst fall since April 5.

India's April CPI inched up to a six-month high of 2.92% from 2.86% in March. Core CPI however eased to 4.6% from 5%.

HDFC reported better-than-expected Net profit and NII numbers. Net profit surged 26.8% y-o-y to Rs 2861 cr while NII rose 6% to Rs 3183 cr. Gross NPA ratio improved to 1.18% from 1.22% q-o-q. Net interest margin fell to 3.3% from 3.5% while loan growth stood at 12.1%.

ITC's Q4 net profit and revenue met estimates while EBITDA missed expectations marginally. Revenue rose 13.3% y-o-y to Rs 11992 cr, EBITDA was up 10.3% at Rs 4752 cr, margin contracted 100 bps to 38.1% while net profit climbed 18.7% to Rs 3482 cr.

OUTLOOK

Today morning, Hang Seng and Nikkei are down 2% and 1.3% respectively while Shanghai is off 0.2%. SGX Nifty is suggesting about 40 points lower start for our market.

As you would agree, we have been negative on Nifty ever since 11550 support was taken out and have been advising holding on to short positions with a trailing stop-loss. After 11370 target was achieved, we had given next targets of 11220, followed by 11070.

Nifty yesterday achieved 11220 and went further lower to touch a low of 11125 before closing at 11148 and is set to open near 11100 today.

11070, the 61.8% retracement level of the entire 10585-11856 upmove, continues to be next downside target to eye. Below 11070, 67% retracement level of this upmove, placed at 11005, would be the next important support.

Immediate resistance on the hourly chart has moved lower to 11350, with the stop-loss of which, trading shorts should be held on to.

11220 CONTINUES TO BE NEXT SUPPORT; 11435 IMMEDIATE HURDLE

11220 CONTINUES TO BE NEXT SUPPORT; 11435 IMMEDIATE HURDLE

WORLD MARKETS

After falling nearly a percent and half in the initial trade, US indices rebounded sharply to end with gains of 0.1%-0.4% after US President Trump said conversations with China over trade will continue and his relationship with President Xi Jinping remains strong.

Comments from Treasury Secretary Steven Mnuchin that China trade talks were “constructive.” and reports saying that Chinese Vice Premier Liu He said the talks went “fairly well,” also boosted the sentiment.

The initial fall was also on account of a Trump tweet saying there’s “absolutely no rush” on a trade agreement with China. This came after he slapped higher tariffs — from 10% to 25% — on $200 billion worth of Chinese goods.

US crude fell 4 cents to $61.66 a barrel while Brent rose 23 cents to $70.62.

European markets, except a 0.1% lower FTSE, gained 0.2%-0.7%. UK's first quarter GDP grew at 0.5%, it's highest since 2017.

For the week, US indices fell 2.1%-3%, European markets saw cuts of 2.4%-4% and Asian markets tumbled 3.7%-5%. WTI ended the week down about half a percent while Brent ended the week slightly lower.

AT HOME

Benchmark indices ended lower by about a fourth of a percent after a choppy session, extending the losing streak to eight consecutive day and closing at two-month low. Sensex slipped 95 points to settle at 37462 while Nifty finished at 11278, down 23 points. BSE mid-cap and small-cap indices however gained 0.2% each. BSE Metal and IT indices tumbled 1.5% and 1.1% respectively, becoming top losers among the sectoral indices while Consumer Durable index was the top gainer, up 1.5%, followed by 0.8% higher telecom index.

FIIs net sold stocks and index futures worth Rs 1245 cr and 1296 cr respectively but net bought stock futures worth Rs 362 cr. DIIs were net buyers to the tune of Rs 1057 cr.

Rupee appreciated 3 paise to end at 69.91/$.

Tata Steel tumbled 6.2% after reports said that Thyssenkrupp is expecting the joint venture with Tata Steel to fail.

For the week, Sensex and Nifty plunged 3.8% and 3.7% respectively, suffering the largest weekly cut in seven months.

March Index of Industrial Production hit a 23-month low, contracting 0.1% as against growth of 0.1% in February.

SBI's net profit and NII missed estimates but asset quality improved. The bank reported a profit of Rs 838 cr for the quarter ended March 31, 2019 as against a loss of Rs 7718 cr in the same quarter last year. NII rose 14.9% to Rs 22954 cr. Gross NPA ratio improved 118 bps q-o-q to 7.53% while net NPA ratio fell to 3.01% from 3.95%. Slippages came in at Rs 7961 cr. Provision coverage ratio improved to 78.73% from 74.6% q-o-q.

L & T's revenue meet street estimates while margin and net profit was a slight miss though FY20 guidance was positive. Revenue rose 10.5% to Rs 44934 cr, EBITDA was up 3.5% at Rs 5600 cr, margin contracted 80 bps to 12.5% and net profit was 7.9% at Rs 3418 cr. The company expects FY20 revenue growth of 12-15% and order intake growth of 10-12% and margins to be maintained at similar levels.

Eicher Motor's revenue and profit beat estimate while margin was a miss. Revenue fell 1.1% to Rs 2500 cr, EBITDA slipped 14% to Rs 685 cr, margin contracted 410 bps to 27.4% while net profit rose 18% to Rs 545 cr.

OUTLOOK

Today, Hang Seng is shut while Shanghai and Nikkei are trading with cuts of 1.1% and 0.6% respectively. SGX Nifty is suggesting about 50 points lower start for our market.

At the risk of repeating, we have been negative on Nifty ever since 11550 support was taken out and have been advising holding on to short positions with a trailing stop-loss. After 11370 target was achieved, we had given next target of 11220.

Nifty, on Friday, touched a low of 11251 before closing at 11278 and is set to open below 11250 today.

11220, the 50% retracement level of the entire 10585-11856 upmove, continues to be immediate support to eye. If that gets breached 11070, the 61.8% retracement level of this upmove, would be the next downside target/support.

Immediate hurdle on the hourly chart has moved lower to 11435, with the stop-loss of which, trading shorts should be held on to.

ITC and HDFC will report their quarterly earnings today.

NIFTY REBOUNDS FROM THE VICINITY OF 11220 TARGET; 11450 IS THE IMMEDIATE HURDLE

NIFTY REBOUNDS FROM THE VICINITY OF 11220 TARGET; 11450 IS THE IMMEDIATE HURDLE

WORLD MARKETS

US indices, after falling nearly a percent and half in the initial trade, recovered through the session to end with cuts of 0.3%-0.5% ahead of the implementation of new U.S. tariffs on Chinese goods.

Intraday recovery happened after Trump said it's possible to get a trade deal with China this week.

Chipmakers, sensitive to higher tariffs, took a hit as Nvidia and Micron dropped about 2.1% and 1.2% respectively. Intel fell nearly 5.3% after sinking nearly 5% in the previous session as the chipmaker said it sees both revenue and earnings per share growing in the "single digit" percentage range over the next three years.

Adding to concerns, the yield on the 10-year Treasury note fell below that of the 3-month bill briefly, inverting part of the so-called yield curve.

US crude fell 42 cents to $61.70 per barrel while Brent rose 2 cents to $70.39.

European markets fell 0.9%-1.9%.

AT HOME

After falling nearly a percent, benchmark indices recouped about half of the losses in late noon trade to end lower in the vicinity of half a percent, extending the losing streak to seventh consecutive day. Sensex lost 230 points to settle at 37558 while Nifty finished at 11301, down 57 points. Both the indices closed at the lowest level since 12th March, marking a near two month low. BSE mid-cap and small-cap indices fell 0.2% and 0.4% respectively. BSE Energy index nosedived 2.6%, becoming top loser among the sectoral indices, followed by 1.5% lower Metal index. IT and Teck indices were the top gainers, up 0.4% each.

FIIs net sold stocks, index futures and stock futures worth Rs 655 cr, 2068 cr and 952 cr respectively. DIIs were net buyers to the tune of Rs 678 cr.

Rupee depreciated 23 paise to end at 69.94/$.

HCL Tech reported better-than-expected constant currency revenue growth of 3.3% q-o-q. Rupee revenue rose 1.9% to Rs 12990 cr, EBIT fell 1.5% to Rs 3039 cr, margin fell 70 bps to 18.9% and profit fell 1.7% to Rs 2568 cr. The company expects FY20 constant currency revenue growth at 14-16%.

Asian Paints posted disappointing set of numbers for Q4FY19. Revenue rose 11.7% y-o-y to Rs 5018 cr, EBITDA fell 2% to Rs 823 cr, margin dipped 230 bps to 16.4% and net profit fell 1.7% to Rs 487 cr.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.4%-1.4% and SGX Nifty is suggesting a flattish start for our market.

At the risk of repeating, we had turned negative on Nifty after 11550 support was taken out and had given target of 11370, followed by 11220.

Nifty yesterday touched a low of 11255 before closing at 11301, coming in very close to 11220 target mentioned above.

11220, the 50% retracement level of the entire 10585-11856 upmove, continues to be downside support to eye. If that gets breached 11070, the 61.8% retracement level of this upmove, would be the next support to watch.

On the way up, 11450, where a trendline adjoining recent tops on the hourly chart is placed, would be the immediate hurdle, upon crossover of which, 10550 would be the next hurdle to eye.

L & T, SBI and Eicher Motors will report their quarterly earnings today.