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Below is the Views On Morning Outlook on today’s market performance by Mr. Deepak Jasani, Head Retail Research, HDFC securities
Indian markets could open flat to mildly lower on Friday following positive US markets overnight and rangebound Asian markets this morning.
The Dow and S&P 500 rose on Thursday to close at record highs as health insurers gained after the Trump administration scrapped a plan designed to rein in prescription drug prices, while financial shares climbed with bond yields. The abandoned proposal would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.
Markets were in buoyant mood on Thursday as Fed Chairman Jerome Powell gave his strongest indication yet that the Federal Reserve will slash interest rates at the July 30-31 meeting.
The 30-stock average broke above 27,000 for the first time in its history, rising 227.88 points, or 0.9% to 27,088.08. The Dow first closed above 26,000 in January of 2018, so it’s been a little more than a year-and-half trek between 1,000 point moves. Microsoft has been the best-performing Dow stock since the index’s first close above 26,000, surging around 50% in that time. Visa, Cisco Systems and Nike are also up sharply since then.
A Labor Department report showed U.S. underlying consumer prices rose by the most in nearly 1-1/2 years in June, but that was unlikely to change expectations the Fed would cut rates this month. Core CPI, which strips out volatile food and energy prices, rose 0.3% MoM
Later in the day, investors briefly were caught off guard following an afternoon U.S. Treasury bond sale that saw weaker-than-expected demand.
Asian shares pulled back on Friday as worries over renewed Sino-U.S. trade tensions weighed on sentiment ahead of the release of June trade data from China, though expectations of a Federal Reserve rate cut later this month kept losses in check. U.S. President Donald Trump said on Thursday that China was not living up to promises it made on buying agricultural products from American farmers.
Indian markets bounced back on Thursday after the recent fall. The gains came on the back of positive global cues. The Nifty index ended 84 points or 0.73% higher at 11,582.9. Traders came back bidding up cyclical stocks in Banks, Auto, Metals sectors on bargain buying. Fears of FPI selling due to the adverse provisions in the Union Budget abated for the time being. Pharma stocks like Aurobindo, Glenmark and Torrent rose due to positive news on regulatory/new launches/credit rating front.
In India markets could open flat to mildly lower on Friday. It could later attempt to cross 11600 and gain some more. Last week the Nifty closed at 10811. China trade data and India IIP and CPI numbers are due today. Technically, the Nifty could now face resistance at 11627-11648 band, while 11536 could provide support. Auto, Metals and Healthcare indices could do well. Among stock under coverage, Majesco, SBI, Dr Reddys, Birla Corp, Bharat Forge, Indusind Bank, DCB Bank could do well.
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