5.30 pm: Dalal Street tumbled in Monday’s trade as negative mood at Wall Street was seen as key negative catalyst rippling worldwide stock markets. Rising tensions between the US and China as well as disappointing Chinese trade data for November dominated theme in today’s trade.
11.30 am: In line with our positive bias, USD/INR is trading on a firm note at 71.32, up around 52 paise.
Technically, the bias continues to be positive for USD/INR with immediate targets at 71.50 and then aggressive targets located at 72.50-73 zone. Any corrective declines likely to be limited at 70-70.25 zone and provides opportunity to establish long positions.
The 4 key negative catalysts for weakness in Indian Rupee:
10.30 am: Gold (+3, 1245). Positive Bias. Hurdles at 1251.
MCX Gold (+0.68%, 31285) Positive Bias. Hurdles at 31901.
Silver (-03, 14.54). Buy on dips. Hurdles at 15.05.
MCX Silver (+0.17%, 37488) Positive Bias. Hurdles at 38381.
Crude Oil (-0.56, 52.33). Buy on dips. Hurdles at 55.
MCX Crude Oil (-1.84%, 3732). Volatility likely ahead of OPEC meeting at Vienna. Hurdles at 3838.
Copper (-0.28, 2.745). U.S- China trade war key catalyst.
MCX Copper (-0.57%, 435). Strength seen only above 445.
Nifty’s CMP 10,503 (Down, 191 points). The bears have the ball and the landscape is suggesting to stay away from investing in an insecure world.
What Technical Tells Us On Nifty: Expect waterfall of selling to continue with the next make-or-break support levels at 10,345 levels.
Nifty’s KEY SUPPORTS: 10,345 & 9,950.
Nifty’s KEY HURDLE: 10675-10801 zone.
Nifty’s INTRADAY RANGE: 10451-10571.
Nifty’s OUTLOOK FOR THE DAY: Sell on strength, Remember, fortune favors the bold.
This Monday morning, Dalal street is setting up for a volatile session, primarily as investors remain wary to exit polls of the five states and then on backdrop is a tumbling Wall Street in Friday’s trade.
(Nifty: 10530, Down 167 points): A dismissal open at Dalal Street.
Adani group stocks get bruised after exit poll results; Adani Ports down 3.90% and Adani Enterprises tanks 6.18%. Index heavyweight Reliance Industries too seen trading with negative bias, down 3% at 1098.
Metals are getting fresh drubbing following weaker-than-expected Chinese trade data: China’s November exports only rose 5.4% from a year earlier.
Judging by early action, the downside risk on Nifty now seen at 10345 (61.8% Fibonacci levels from 26th October low to 3rd December highs).
Selling on any excessive strength should be the preferred strategy. Hurdles for Nifty seen at 10,675 mark.
*At the time of writing Dow futures were further down 200 points as China summoned the U.S ambassador to Beijing to protest the detention of Huawei CFO Meng Wanzhou, an arrest that has renewed fears over a prolonged U.S.-China trade war.*
*SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:*
Nifty’s Intraday Trend: Negative.
Global: Negative.
FII: Negative.
DII: Neutral.
F&O: Neutral.
Sentiment: Negative.
*NIFTY’s CRUCIAL LEVELS FOR THE DAY:*
Nifty’s CURRENT MARKET PRICE: 10,694.
Nifty’s KEY SUPPORTS: 10,569 & 10,351.
Nifty’s KEY HURDLE: 10,751 & 10,945.
Nifty’s INTRADAY RANGE: 10545-10721.
Nifty’s OUTLOOK FOR THE DAY: Negative.
*AS PER OPTIONS DATA:*
• As per option data, key resistance level for the December series for Nifty are at 11,000 strike price as maximum call open interest of 37.13 lakh contracts were seen at the 11,000 strike price. Key support level for the December series is at 10,200 as Maximum Put open interest of 37.46 lakh contracts was seen at the 10,200 strike price.
*FII DATA:*
• As per Friday’s provisional data available on the NSE, Foreign Institutional Investors (FIIs) sold shares worth Rs 817.4 crore while Domestic Institutional Investors bought Rs 242.56 crore worth of shares in the Indian equity market on December 7.
Our *call of the day* suggests that the trading screen will continue to indicate nervousness as the benchmark Nifty has just violated its 200 DMA at 10,751 marks. Sentiments appear bearish and could precipitate further waterfall decline.
Nifty will face major resistance at its 200 DMA at 10,751 ( supports turns resistance). Buying advised only above Nifty 10,751 mark.
Our *chart of the day* suggests establishing short positions in stocks like GMR INFRA, LUPIN and TATA GLOBAL on any intraday strength with interweek perspective.
*STOCKS BANNED IN FNO SEGMENT FOR TODAY:* NIL.
*IMPORTANT THEMES OF THE DAY:*
1. Wall Street tumbled in Friday’s trade and the global cues continue to be mostly negative amidst arrest of the CFO at China’s Huawei Technologies sparking fresh concerns about the U.S. and China’s ability to resolve longstanding differences on trade and intellectual property rights.
The negative takeaway is that S&P 500 and Dow are again into negative territory for 2018 despite a relatively strong jobs report.
2. All anxious eyes will be on the assembly election outcome of the five states that will be released tomorrow Tuesday, December 11
The outcomes of the five state elections will be crucial for Dalal Street, as they are likely to set the tone for the 2019 general elections.
Digging deeper, of the five states, investors’ will primarily focus on Madhya Pradesh, Rajasthan and Chhattisgarh as these states had given BJP huge contribution in 2014 win. The results are also significant as they will be indicative of governments policies and concern over rural farm distress.
Well, expect Nifty to simply jump with joy if BJP wins in the said three states. Alternatively, if the outcome is against the ruling party then it makes sense to sell first and ask question later.
3. Falling U.S bond yield is another key negative catalyst.
The bears camp would be glad to note that the U.S. Yield Curve has just inverted.
The yield curve is simply the difference between short- and long-term interest rates. Long-term rates normally run higher than short-term rates. It reflects that the structure of market is healthy. The 10-year yield, for example, should run substantially higher than the 2-year yield. The 10-year Treasury yield rises when markets anticipate higher growth — and higher inflation. But when the 2-year yield and the 10-year yield begin to converge, the yield curve flattens… and time compresses. When the 10-year yield falls beneath the 2-year yield, the yield curve is said to invert.
An inverted yield curve is a predictor of recessions and most importantly, a nearly perfect warning of lean days ahead. It suggests an economic slowdown is coming; a time when investors expect little growth or rising fears of a recession.
4. This week commanding attention would be vote on a deal covering Britain’s exit from the European Union. Also on focus will be negotiations between Italy and the EU over its budget deficit. By this Tuesday, the British Parliament has to decide whether the deal Prime Minister Theresa May agreed with the European Union or will go through.
5. Oil prices ended on a strong in Friday’s trade and up 3% in last week’s trade after OPEC announced that it will reduce overall production among its members by 800,000 barrels a day from October’s levels for six months, beginning in January 2019.
*HAVE A PROFITABLE TRADING DAY!*
The bears seen dominating…
*9 AM UPDATE, 10th December 2018:* DOW FUTURES (-201, 24231) NASDAQ FUTURES (-57, 6566) SGX NIFTY (-141, 10598) NIKKEI (-487, 21191) HANG SENG (-451, 25618).
All eyes will be on Vijay Mallya as a local court in UK will decide today if fugitive tycoon will be extradited to face trial in India.
Expect PSU Banks to jump with joy if the verdict goes in favor of India.
We suspect, sentiments could improve considerably at Dalal Street and will be a boon to ruling BJP if there is the slightest hint that liquor baron Vijay Mallya will be extradited to face trial in India. It will also put pressure on a number of wanted tycoons – including celebrity jeweller Nirav Modi and Mehul Choksi.
Alternatively, if the verdict goes in favor of Vijaya Mallya, then the Central Bureau of Investigation and the Enforcement Directorate, which are investigating him, would get 14 days to file an appeal in a higher court.
Vijay Mallya is on the run and has been living in the UK since 2016 after a consortium of banks got together to start legal proceedings to recover the loans.
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