8700 CONTINUES TO BE IMMEDIATE TARGET; 8570 CONTINUES TO BE IMMEDIATE SUPPORT

8700 CONTINUES TO BE IMMEDIATE TARGET; 8570 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

Dow lost 0.1% while S & P 500 end Nasdaq ended with modest gains on Friday as encouraging earnings from major tech companies offset negative reports from some energy firms and a disappointing GDP report.

Alphabet climbed 3% and Amazon rose 0.8% after both firms reported earnings Thursday that beat on both the top and bottom line. Exxon Mobil closed fell 1.4% after posting earnings that missed expectations. Chevron reversed losses to close 0.7% higher after adjusted earnings per share topped expectations by 3 cents at 35 cents a share.

The advance read on second-quarter GDP showed a 1.2% annualized growth rate, well below expectations for 2.6%. First-quarter GDP was revised lower to 0.8% from 1.1%. In other economic news, Chicago PMI came in at 55.8 in July versus 56.8 in June. Consumer sentiment was 90.0 in July.

Dollar index fell more than a percent and Gold rose $16 to $1358 an ounce.

US oil rose 46 cents or 1.1% to $41.60 a barrel

In Europe, except a flat FTSE, other markets gained between 0.4%-2%.  Euro zone gross domestic product (GDP) rose 0.3% q-o-q (compared to a 0.6% expansion seen in 2016's first quarter), while unemployment remained unchanged at 10.1% in June. Inflation in July also increased slightly, coming in at 0.2% y-o-y.

Yen climbed against the dollar after the Bank of Japan's (BOJ) monetary policy easing disappointed markets. BOJ Governor said the Japanese central bank would increase its exchange-traded fund (ETF) purchases, but did not change interest rates or increase the monetary base.

For the week, Dow and S & P 500 lost 0.8% and 0.1% respectively, breaking 4-week winning streak. Nasdaq however gained 1.2%, extending the winning streak to fifth straight week. In Europe, while FTSE lost 0.1, DAX and CAC gained 1.9% and 1.3% respectively. In Asia, Nikkei, Shanghai and Hang Seng lost 0.4%, 1.1% and 0.3% respectively.

AT HOME

After a flattish start, benchmark indices saw a gradual downward drift through the session to end with cuts of 0.6% and 0.3% respectively for Sensex and Nifty respectively. Sensex settled at 28052, down 157 points while Nifty lost 28 points to finish at 8638.50. BSE mid-cap and small-cap indices however gained 0.7% and 0.2% respectively. BSE Telecom index tumbled 1.6%, becoming top loser among the sectoral indices, followed by 0.9% cut in Consumer Durable index. Auto and Consumer Discretionary Goods & Services indices gained 0.8% each, becoming top gainers.

FIIs net sold stocks and stock futures worth Rs 14 cr and 866 cr respectively but net bought index futures worth Rs 85 cr. DIIs were net buyers to the tune of Rs 148 cr.

Rupee appreciated 2 paise to end at 67.02/$.

ICICI Bank reported better-than-expected 25% fall in net profit at Rs 2232 cr. NII grew only 0.9% to Rs 5158.5 cr and was a miss. Provisions for bad loans rose 163% y-o-y but fell 24.4% q-o-q to Rs 2514 cr. Asset quality weakened further as gross NPA ratio rose to 5.87% from 5.82% and Net NPA ratio rose to 3.35% from 2.98%. Slippages soared to 8249 cr, much higher than the expected Rs 5000 cr. Watch list however declined to Rs. 38723 from 44000 cr.

L & T missed street expectations on all counts. Consolidated net profit rose 46% to Rs 610 cr and revenue increased 9.1% to Rs 21874 cr. The company received fresh orders worth Rs 29702 cr, up 14% y-o-y, which was in-line. Operating profit grew 16% to Rs 1905 cr and margin expanded by 50 bps to 8.7%.

OUTLOOK

China's official manufacturing PMI for July has come in at 49.9 vs 50 in June. The Caixin manufacturing PMI has come in at 50.6, up from 48.6 in June.

Today morning Shanghai is down about 0.8%, Nikkei is flat and other Asian markets are trading with gains of upto 1.2%. SGX Nifty is suggesting about 40 points higher start for our market.

Nifty on Friday fell 28 points to close at 8638 but a positive start today will take the benchmark closer to the 8675 top made last week.

We have been working with immediate target of 8700 after the crossover of 8595-8475 consolidation and that continues to be the upside target to eye. Above 8700, 8845, the top made in April 2015 would be the next target to eye.

8570 continues to be immediate support on the hourly chart, with the stop loss of which trading longs should be held on to.

Auto companies will report July sales figures.