Good Morning & Welcome to Friday's trading action at Dalal Street, dated 2nd August 2019.

The breaking news this Friday morning is that Donald Trump imposes fresh tariffs on China. The 10% levies will apply to $300 billion of U.S. imports from China. The trade talks between the two countries are due to resume September.

That brings us to our call of the day which suggests Dalal Street's fall is proving to be irreparable. We suspect, "All the kings horses and all the kings men unlikely to put back Nifty together again".

Our chart of the day establishing short like BALKRISHNA INDUSTRIES, TATA STEEL and JINDAL STEEL & POWER with interweek perspective..

7 AM GLOBAL UPDATE:

DOW (-281, 26583)

NASDAQ (--64, 8111)

SGX NIFTY (-51, 11071)

NIKKEI (-436, 21105)

HANG SENG (-615, 26950)

BOVESPA (+314, 102126)

OIL (+0.60, $54.55)

GOLD (+16, $1448)

USD/INR: 68.98

Institutions:

FII: - 1056.55 Cr

DII: +561.28 Cr

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

Global: Negative.

FII: Negative.

DII: Positive.

F&O: Negative.

‪Sentiment: Negative.

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 10,980.

Nifty’s SUPPORT:

Intraday: 10811/10751.

Medium Term: 10701.

Long Term: 10,001.

Nifty’s RESISTANCE:

Intraday: 11071/11287.

Medium Term: 11389/11557.

Long Term: 12,001.

Nifty’s RANGE:

Intraday: 10851-11051.

Medium Term: 10701-11507.

Long Term: 10001-11901.

Nifty’s OUTLOOK:

Intraday: Negative.

Medium Term: Neutral.

Long Term: Neutral.

IMPORTANT THEMES FOR THE DAY:

The street is facing severe negativity and blame the same to FIIs camp who have been in exiting mode in Indian stock markets, selling close to Rs 16,870 crore worth of equities in July alone. In yesterday's trade, FIIs sold shares worth Rs. 1056.55 cr.

Also pessimism is the buzzword at Dalal Street, amidst:

1. Global growth concerns.

2. The Q1 earnings are below street's expectations and the biggest worry and biggest disappointment in the ongoing earning season is that asset quality concerns reported by banking & financial sectors.

3. Auto stocks are in free fall on higher vehicle registration fees plan and worse Q1 results.

We suspect, Dalal Street will continue to underperform and it makes sense to keep books light with a couple of short positions on. This market has much work to do to be on the bullish side again, so the preferred strategy is to wait it out. Investors will do good to preserve capital during the down-trending times like these.

Investors should always remember that cash is a position and even if we see a rally today, going all in long is not advisable until we have closed in bullish territory and confirming to the upside the following day.

Long story short: Dalal Street needs to see significant buying before investors' jump into buying a rally. Until then, it's safe to assume that it's just a dead can bounce.

Investors face a fresh batch of quarterly results this Friday: HDFC, EXIDE, UJJIVAN, EQUITAS, ITC, IRB, BATA, POWERGRID, SBIN, TATA COMMUNICATION, MC DOWELL, BEML, UNION BANK OF INDIA

On the positive side, there are definitely hopes of rate cuts by RBI.

The good news for bulls camp is that at the moment the backdrop is of low inflation and subdued consumption demand. India's inflation has remained below the central bank's medium-term target of 4% for almost a year.

Amidst these catalysts, the Reserve Bank of India (RBI) is expected to cut interest rates for the fourth time in a row at its meeting on 7 August. The street expects a 25 basis points rate cut.

On the positive side is also GST collection which grew at 5.8% in July to₹1.02 trillion. This is the third time the combined central and state GST receipts crosses ₹1 trillion mark so far this fiscal.

Still negativity will be hallmark of today's trade amidst weak technical landscape. Nifty is trading well below its 200DMA at 11139 mark. The next stop is at 10751-10801 zone.

Outlook for Friday: Not a pretty picture

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