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Markets Getting More Confident - HDFC Securities
The Dow Jones Industrial Average rose to record highs Thursday as Trump administration abandoned a proposal that would have hurt health insurers.
The S&P 500 too made a new high along with 10% of its constituents.
Powell continued with his Dovish testimony Thursday, this time before the Senate Banking Committee. Powell reinforced the message he sent Wednesday. He made a case for why a ‘pre-emptive’ rate cut could be necessary, even if economic and job growth remain strong.
On the trade front, Trump has now France under the scanner, which has proposed tax on American internet giants like Google parent Alphabet, Amazon and Facebook.
U.S. Trade Representative Robert Lighthizer’s agency will investigate the tax under Section 301 of the Trade Act of 1974, the same provision it used last year to investigate China’s technology policies.
The Rupee is likely to be under pressure in the morning, which should allow the IT companies to do better. Thursday saw some late buying into the sector as the U.S. Senate passed a bill that removes 7% country cap on Green card issuance, which should help highly skilled Indians. However, the bill will have to be passed by the House and then get then get Presidential nod, which can’t be taken for granted.
Beaten down Pharma and Auto stocks also saw some buying Thursday, making the market participation broader as the advance decline ratio returned to the positive territory after four trading sessions.
Asian markets, which began in the red are now modestly in the green but the SGX Nifty still indicates a lower opening.
We are of the view that a lower open does not matter, but it’s the closing in the green, which is important for a Friday. Some short covering was seen in the Nifty yesterday. Helping the markets climb the wall of worry today is the news that the Monsoon has picked up in July. It is 24% better than last year.
The Nifty now has a resistance in the region of 11,650- 660 and support at 11,520.
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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