NIFTY BACK TO 34-DMA SUPPORT OF 7780

NIFTY BACK TO 34-DMA SUPPORT OF 7780

WORLD MARKETS                             

US indices tumbled 0.4%-1% on Friday as strong retail sales data reignited concerns over interest rate hike.

April retail sles rose 1.3%, topping expectations and marking biggest gain in over a year. The producer price index rose 0.2% in April. The preliminary read on May consumer sentiment rose to 95.8. Business inventories rose a more-than-expected 0.4% in March.

Dollar index gained about half a percent to hit 94.57, its highest in three weeks.

US crude oil futures settled down 49 cents or 1.1% at $46.21 a brarrel. Baker Hughes said U.S. oil rigs fell by 10.

European markets gained 0.4%-0.9%.  European car sales rose 9% in April.

For the week, Dow and S & P 500 fell 1.2% and 0.5% respectively for their first three-week decline since the week ended Jan. 15. Nasdaq lost 0.4% for its first four-week losing streak since October 2014. Key European markets gained 0.2%-0.8% In Asia, Shanghai and Hang Seng tumbled 3% and 2% respectively while Nikkei gained 2%.

Nymex oil gained 3.5%. Dollar index gained about 0.7% for its second consecutive weekly gain. Gold declined 1.6%, its worst week since the week ending March 24.

AT HOME

After a modestly lower start, benchmark indices saw sharp bouts of selling through the session to end with deep cuts of more than a percent. Sensex lost 301 points to settle at 25490 while Nifty ended at 7815, down 85 points. BSE mid-cap and small-cap indices lost 0.6% and 0.2% respectively.  All the BSE sectoral indices ended in red with Realty and Metal indices leading the tally, down 2% each.

FIIs net bought stocks worth Rs 1494 cr but net sold index futures and stock futures worth Rs 238 cr and 324 cr respectively. However, stripped off the Rs 2100 cr Eicher deal, FII flow would be negative. DIIs were net buyers to the tune of Rs 667 cr.

Rupee depreciated 14 paise to end at 66.77/$.

For the week, Sensex and Nifty gained 1% each, breaking two-week losing streak.

Bank of Baroda reported a net loss of Rs 3230 cr in Jan-March quarter as provisions surged to Rs 6858 cr compared to Rs 6164 cr q-o-q and Rs 1818 cr y-o-y. NII rose 5% to Rs 3330 cr and was better-than-estimates. Gross NPA deteriorated to 9.99% from 9.68% sequentially but Net NPA improved to 5.06% from 5.67%. Provision coverage ratio improved to 60.09% from 52.70%.

Met department, in its latest forecast yesterday said that the monsoon onset will be delayed by six days. 

OUTLOOK

Data over the weekend from China showed investment, factory output and retail sales all grew more slowly than expected in April, with factory output cooling to 6% growth in April compared to market expectation for a 6.5% rise.

Today morning Nikkei, on the back of weaker yen, is up about a percent and Hang Seng is up 0.3%. Other Asian markets are trading with modest cuts and SGX Nifty is suggesting about 30 points lower opening for our market.

Readers would recall that we had advised going long on Nifty when immediate hurdle of 7780 was taken out last Monday for the target of 7990, which was the top made in April. During the week, Nifty touched a high of 7916 but tumbled on Friday to 7784 before closing at 7815.

After Friday's fall, Nifty is back to immediate important support of 34-DMA, which has now moved up to around 7780. A breach of 7780 would also confirm a sell on the hourly chart and in that case 7678, the bottom made in early May, would be the next downside target to eye.

On the way up, 7916, the top made on Thursday, would now be the immediate hurdle above which 7990, would be the tougher resistance to eye.