Hello,Good Morning & Welcome to Friday's trading action at Dalal Street, dated 26th July 2019.

Pessimism is seen greeting Dalal Street on the first day of August series. The negativity is on backdrop of sixth consecutive session of losses for benchmark Nifty & Sensex.

7 AM GLOBAL UPDATE:

DOW (-129, 27140)

NASDAQ (-83, 8238)

SGX NIFTY (-39, 11262)

NIKKEI (-87, 21669)

HANG SENG (-188, 28406)

BOVESPA (-1464, 102655)

OIL (-0.01, $56.01)

GOLD (+3, $1417)

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: 11,252.

Nifty’s SUPPORT:

Intraday: 11127/11001.

Medium Term: 10901.

Long Term: 10,501.

Nifty’s RESISTANCE:

Intraday: 11371/11411/11527.

Medium Term: 11707/11857.

Long Term: 12,251.

Nifty’s RANGE:

Intraday: 11175-11341.

Medium Term: 11101-11731.

Long Term: 10501-12251.

Nifty’s OUTLOOK:

Intraday: Volatile.

Medium Term: Neutral.

Long Term: Neutral.

Our call of the day suggests that pessimism will be on track, and it looks like Dalal Street will extend losses for the seventh consecutive session.

We say so because:

• FIIs have been also been net sellers in all trading sessions since July 2nd and have sold to the tune of Rs. 12520 crores, their highest outflow in 2019.

• Technically speaking, the recent sequence of lower high/low is intact on Nifty charts. Nifty is also now trading below its 200-EMA (exponential moving average) which was placed at 11,297 mark. Immediate downside risk now shifts to Nifty's 200 DMA (day moving average) at 11,127 zone.

• Option data suggests that Maximum Put open interest (OI) is at 11,200 while maximum Call OI is at 11,300 strike.

• The ongoing earning seasons is mixed.

• Deficit in cumulative rainfall.

• IMF cuts India's growth outlook for 2019.

• Negative sentiments after the government comes out with proposal to tax the super rich which they had imposed in budget.

Our chart of the day suggests establishing short position in stocks like UNION BANK OF INDIA, MUTHOOTH FINANCE and INDIA BULLS HOUSING FINANCE with interweek perspective..

IMPORTANT THEMES FOR THE DAY:

The two big question on investors' mind:

• Is the worst over?

• Could today's session be worse?

Well, overnight Wall Street retreated from record highs after a series of mostly disappointment earnings reports. The negative takeaway was that sentiment was down despite the prospects of further interest rates cuts from the European Central Bank and the Federal Reserve.

We suspect, the Reserve Bank Of India (RBI) will also cut its benchmark repo rate by 25 basis points to 5.50% at the August 7 meeting. The two catalysts' working in favor of rate cut by RBI are: low growth and weak inflation.

Meanwhile, for the day commanding attention would be Q1 results of Maruti Suzuki, Bajaj Auto, Punjab National Bank, Vedanta, JSW Steel, Vodafone Idea, Bajaj Holdings.

• Saturday: ICICI Bank, Havells, Escorts.

Amongst Q1 results trickled in yesterday:

1. Biocon Q1 Profit jumped 72.3% to Rs 206.3 crore;

2. Bank of Baroda was back in the black with Q1 profit at Rs 710 cr, but negative takeaway was that its asset quality weakened.

3. Trouble mounts for Tata Motors as its Q1 net loss nearly doubles to ₹3,680 cr on lower JLR sales.

Outlook for Friday: Sell on strength.

Bottom-line: Spotlight would be also on the next round of US-China trade talks which will be held next week on Monday in Shanghai.

Yes, the only ray of hope for investors at Dalal Street is that oversold technical conditions prevail and the key positive catalyst for a turnaround could be the amicable resolution when the U.S. Trade Representative Robert Lighthizer heads to China on Monday to begin trade talks.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are heading to Shanghai to meet with their Chinese counterparts – Vice Premier Liu He and Commerce Minister Zhong Shan. The talks are aimed at restarting negotiations after Trump and Chinese President Xi Jinping reached a deal in June to withhold the imposition of new tariffs as the two nations seek to craft a trade deal.