Monday, June 30, 2014

PRUDENT MORNING MANTRA - 30.06.2014

NIFTY EXTENDS CONSOLIDATION TO THIRD WEEK

WORLD MARKETS

After trading in the negative territory for the better part of the day, US indices spike up in last half an hour to end with modest gains on Friday.

Thomson Reuters/University of Michigan's index on consumer sentiment for June rose to 82.5, up from 81.9 in May.

European markets ended mixed with modest changes. Data released on Friday confirmed that France's economy posted no growth in the first quarter of 2014 while Britain's GDP grew by 0.8%. Research body GfK had reported that British consumer confidence reached its highest since March 2005 this month, adding to signs the economy is recovering.

For the week, Dow and S & P 500 lost 0.6% and 0.1% respectively while Nasdaq gained 0.7%. European markets however, ended with deep cuts ranging from 1%-3%.

Tensions in Iraq also remain in focus after government forces attempted to dislodge militant insurgents from the northern city of Tikrit on Sunday.

AT HOME

Benchmark indices managed to end modestly higher after a choppy trading session, breaking a two-day losing streak. Sensex gained 37 points to settle at 25100 while Nifty finished at 7509, up 16 points. BSE mid-cap and small-cap indices gained 0.3% and 0.4% respectively. BSE Healthcare and IT indices surged 2.5% each, becoming top gainers among the sectoral indices while Metal and auto indices lost 1.3% and 0.5% respectively.

FIIs net bought stocks worth Rs 183 cr but net sold index futures and stock futures worth Rs 10 cr and 896 cr respectively. DIIs were net sellers to the tune of Rs 172 cr.

Rupee appreciated 5 paise to close at 60.08/$.

For the week, Sensex and Nifty closed almost flat.

OUTLOOK

Today morning, Asian markets are trading with modest gains and SGX Nifty is suggesting a marginally higher start for our market.


As mentioned in Friday's report, Nifty continues to be in a consolidation mode within a descending channel, a breach of which, on either side, is required for taking a fresh directional view. The upper and lower levels of this channel are currently placed around 7610 and 7410 respectively and would be important levels to watch out.

Friday, June 27, 2014

PRUDENT MORNING MANTRA - 27.06.2014

NIFTY CONTINUES TO CONSOLIDATE IN A NARROW CHANNEL

WORLD MARKETS

US indices, after opening with cuts of nearly three fourth of a percent, recovered through the session to end just marginally lower.

St. Louis Fed President James Bullard suggested interest rates could rise sooner rather than later. Also weighing on sentiment was data showing that U.S. consumer spending rose less than expected in May, which led many economists to pare back growth forecasts for the second quarter.  Jobless claims declined by 2,000 to 312,000 last week, in line with expectations.

European markets, except a flattish FTSE, ended with cuts in the vicinity of half a percent with shares in Barclays and Standard Chartered ending the day sharply down following news of a lawsuit and a profit warning respectively.

AT HOME

Benchmark indices plunged a percent with Nifty closing at the lowest level since 5th June. Sensex slipped 251 points to settle at 25063 while Nifty finished at 7493, down 76 points.  BSE mid-cap and small-cap indices lost 0.3% each. BSE Oil & Gas index plunged 3.9%, becoming top loser among the sectoral indices, followed by 2.7% cut in Realty index. Capital Goods and Consumer Durable indices gained 0.9% and 0.7% respectively.

FIIs net sold stocks and stock futures worth Rs 602 cr and 1313 cr respectively but net bought index futures worth Rs 154 cr. DIIs were net buyers to the tune of Rs 171 cr.

Rupee depreciated 2 paise to close at 60.14/$.

OUTLOOK

Today morning, Asian markets are trading flat to modestly lower but SGX Nifty is suggesting a marginally higher start for our market.

In yesterday's report we had mentioned that broadly, Nifty continues to be in a consolidation mode and traders would do well to keep trading volumes low and wait for this consolidation to get over for taking a fresh directional view on Nifty.


That continues to be advice as Nifty continues to consolidate within a narrow channel, making lower tops and bottoms. A breakout from this channel is required for a fresh directional view on Nifty. The upper and lower levels of this channel are currently placed around 7615 and 7410 respectively and would be the important levels to watch out.

Thursday, June 26, 2014

PRUDENT MORNING MANTRA - 26.06.2014

NIFTY EXTENDS CONSOLIDATION; GOVERNMENT DEFERS GAS PRICE HIKE

WORLD MARKETS

After starting lower on the back of weak GDP data and concerns over Iraq, US indices bounced back to end with gains between 0.3%-0.7%.

The final reading of the US first quarter GDP showed a contraction of 2.9%, a much steeper pace than expected 1.7% decline. Separately, May durable goods orders unexpectedly declined 1% on month while the services sector expanded at its fastest clip in more than four years in June.

In Iraq, militants yesterday seized control of the Balad airbase, one of the country's largest, as well as the Ajeel oil site, located east of Tikrit. The attack came as Iraqui Prime Minister said he supported the process of forming a new government by July 1st.

Meanwhile in Ukraine, Western powers warned Russia yesterday that they may impose new sanctions if Moscow does not take more action to defuse the conflict in east Ukraine

European markets lost between 0.7%-1.3%.

Nymex crude rose 0.4% to $106.5 while gold rose 0.1% to $1322.6 an ounce.

AT HOME

Benchmark indices ended marginally lower after trading in an extremely narrow range through the trading session. Sensex lost 55 points to settle at 25314 while Nifty finished at 7569, down 11 points. BSE mid-cap and small-cap indices however gained 0.5% and 0.4% respectively. BSE Realty and Consumer Durable indices gained the most among the sectoral indices, rising 0.9% each while Oil & Gas and Capital Goods indices lost 0.8% and 0.7% respectively.

FIIs net bought stocks and index futures worth Rs 695 cr and 178 cr respectively but net sold stock futures worth Rs 509 cr. DIIs were net sellers to the tune of Rs 434 cr.

Rupee ended at 60.12/$, the previous close being 60.13/$.

Finance Minister Arun Jaitley yesterday afternoon announced the extension of low excise duty for auto, consumer durables and capital goods sector for six months till December 31.

OUTLOOK

In a setback to gas producers like Reliance Industries, the government yesterday postponed revision in natural gas prices by three months pending a "comprehensive" review to make a controversial pricing formula more palatable. Reliance Industries GDR ended lower by 2% on London Stock Exchange yesterday. Oil minister also clarified that there is no plan to hike LPG and kerosene prices.

Today Morning, Asian markets are trading with modest gains but SGX Nifty is suggesting a marginally lower start for our market.

7540 continues to be immediate support on the hourly chart below which 7441, the low made on Monday would be the next support to eye.

On the way up, 7663 continues to be the immediate hurdle.


Broadly, Nifty continues to be in a consolidation mode and traders would do well to keep trading volumes low and wait for this consolidation to get over for taking a fresh directional view on Nifty.

Wednesday, June 25, 2014

PRUDENT MORNING MANTRA - 25.06.2014

IRAQ CONCERNS OVERSHADOW POSITIVE US DATA

WORLD MARKETS

US indices, after starting in the positive territory on the back of encouraging economic data, saw a sustained downward move through rest of the session to end with cuts ranging from 0.4%-0.7% on account of geopolitical concerns.

Media reports suggested that Syrian warplanes struck targets in western Iraq, killing at least 50 people, as Syria joined Iran in coming to the aid of the embattled Baghdad government. Meanwhile, militants launched an attack on one of Iraq's largest air bases, located less than 100 kilometers from Baghdad.

Back in the US, new-home sales for May jumped 18.6% to a seasonally adjusted annual rate of 504,000 units, marking a six-year high and beating the expected 440,000 forecast. Also, the consumer confidence index for June came in at 85.2, beating estimates of 83. The Case-Shiller index of home prices for April rose 10.8% y-o-y and 1.1% month-on-month.

Speaking in New York on, Philadelphia Federal Reserve Bank President Charles Plosser said the economy is nearing the central bank's targets more quickly than expected, and could have the Fed increasing interest rates sooner than anticipated.

European markets ended mixed. Ifo business climate index for Germany in June showed a fall to 110.4 points from 111.2 points last month and underscored concerns about sluggish economic recovery in the euro zone.

AT HOME

Building on Monday's last half an hour recovery, benchmark indices surged nearly a percent and quarter in yesterday, breaking a 4-day losing streak. Sensex soared 338 points to settle at 25369 while Nifty finished at 7580, up 87 points. BSE mid-cap and small-cap indices gained 1.6% each. Except a 0.1% cut in BSE Healthcare index, all other sectoral indices ended in green with Realty and Consumer Durable indices leading the tally, putting on 3.2% and 2.4% respectively.

FIIs net bought stocks and index futures worth Rs 285 cr and 624 cr respectively but net sold stock futures worth Rs 280 cr. DIIs were net sellers to the tune of Rs 216 cr.

Rupee appreciated 7 paise to close at 60.13/$.

OUTLOOK

Today morning, Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a flattish start for our market.

After holding on to 7487 support on closing basis on Monday, Nifty yesterday surged 87 points to end at 7580.

In yesterday's report we had mentioned that the nearest resistance on the hourly chart is placed at 7560, upon crossover of which next major hurdle to eye would be 7663, which is the top made last week. That continues to be the view.


Immediate support on the hourly chart is placed at 7540, with the stop loss of which trading longs can be held on to.

Tuesday, June 24, 2014

PRUDENT MORNING MANTRA - 24.06.2014

LAST HALF AN HOUR REBOUND PUTS NIFT BACK ABOVE 7487 SUPPORT; 7560 IS IMMEDIATE RESISTANCE

WORLD MARKETS

Dow and S & P 500 ended a tad lower, breaking a 6-day rising streak while Nasdaq closed marginally higher.

The sale of previously-owned homes rose 4.9% in May to an annualized rate of 4.9 million, versus a 1.5% gain the month before. Flash manufacturing PMI for June rose to 57.5 from 56.4 in May.

European markets lost between 0.4%-1.3%. The euro zone PMI for June came in at 52.8 against forecasts of 53.5. This marked a second consecutive monthly fall, rasing fears that the recovery is losing momentum. The index also highlighted ongoing divergence between the euro zone's two largest economies, with French activity contracting further in June, while Germany's private sector continued to expand.

However, basic resources stocks, which have heavy exposure to China, ended higher, after China's HSBC PMI showed the first expansion in six months.

U.S. Secretary of State John Kerry traveled to Baghdad yesterday, where he pushed the Iraqi prime minister to form a more inclusive government as it attempts to stem a Sunni insurgency across much of the northern and western parts of the country.

Nymex crude lost 0.6% to $106.2a barrel; Gold rose 0.1% to $1318.4 an ounce.

AT HOME

Benchmark indices, after plunging nearly a percent during the session, saw a smart rebound in last half an hour to end lower by just a fourth of a percent. Sensex lost 74 points to settle at 25031 while Nifty finished at 7493, down 18 points. BSE mid-cap and small-cap indices in fact ended with gains of 0.6% each. BSE FMCG index nosedived 4.1%, becoming top loser among the sectoral indices, followed by 1.6% cut in the IT index. Oil & Gas and Metal indices gained 1.4% and 1.1% respectively.

ITC plunged 6.2%, marking owrst fall since May 19, 2009, on reports that the government may raise taxes on cigarettes aggressively in the upcoming budget in July.

Sugar stocks soared after the Food Minister Ram Vilas Paswan, in a move to bail out the ailing sugar industry, allowed an import duty hike from 15% to 40%, extended sugar export incentives till September 2014 and raised ethanol blending with petrol to 10%.

FIIs net sold stocks, index futures and stock futures worth Rs 214 cr, 15 cr and 457 cr respectively. DIIs were net buyers to the tune of Rs 117 cr.

Rupee depreciated 2 paise to close at 60.20/$.

The Budget Session will commence on July 7. The Economic Survey will be tabled on July 9 and the General budget on July 10. Railway budget will be presented on July 8.

OUTLOOK

Today morning, Asian markets, barring a 0.6% lower Nikkei, are trading with modest gains and SGX Nifty is suggesting about 20 points higher opening for our market.

Nifty, after breaking the 7487 support, tumbled to 7441 intraday, but saw a sharp rebound in last half an hour to end at 7493, holding the 7487 level on closing basis.

The benchmark however, continues to make lower-tops and lower-bottoms on the hourly chart and a negation of this formation is required to put it back on the bull track. Nearest resistance on the hourly chart is placed at 7560, upon crossover of which next major hurdle to eye would be 7663, the top made last week.

On the way down, 7409 and 7340, the 50% and 61.8% retracement levels of the recent 7118-7700 upmove, continue to be support levels to eye.


Traders are advised to wait for the crossover of 7560 for initiating fresh longs.

Monday, June 23, 2014

PRUDENT MORNING MANTRA - 23.06.2014

7663-7487 IS THE IMMEDIATE RANGE

WORLD MARKETS

US indices gained about a fifth of a percent on Friday with Dow and S & P 500 hitting records while extending gains into a sixth session.

European markets, except a modestly higher FTSE, lost between 0.2%-1%.

Nymex crude rose 83 cents to $107.3 a barrel and Gold gained $2.5 to $1317 an ounce.

For the week, US indices gained between 1%-1.4% while European markets, except Italy, ended with modest gains.

Developments in Iraq also remain front and center. Militants reportedly seized a frontier post on the Iraqi-Syrian border on Sunday, a day after grabbing another border crossing further north. US Secretary of State John Kerry yesterday said that the U.S. wanted Iraqis to find an inclusive leadership to contain the Islamist insurgency but would not decide on its rulers.

AT HOME

Benchmark indices ended lower by four tenth of a percent after a rangebound but choppy trading session, extending the losing streak to third straight day. Sensex lost 96 points to settle at 25105 while Nifty finished at 7511, down 30 points. BSE mid-cap and small-cap indices lost 0.4% and 0.7% respectively. BSE Consumer Durable index climbed 3.7%, becoming top gainer among the sectoral indices, followed by 0.8% rise in Realty index. Auto and Healthcare indices lost 1.1% each.

FIIs net sold stocks worth Rs 221 cr but net bought index futures worth Rs 41 cr and 69 cr respectively. DIIs were net buyers to the tune of Rs 74 cr.

Rupee closed at 60.18/$, depreciating 11 paise compared to previous close.

For the week, Nifty and Sensex lost 0.4% and 0.5% respectively, extending the losing streak to second week.

Indian Railway, on Friday evening, hiked passenger fares by 14.2% across all classes and freight charges by 6.5%.

OUTLOOK

China's HSBC flash PMI for June has come in at 50.8, improving from 49.4 in May and showing an expansion for the first time in six months.

Asian markets are trading with modest gains and SGX Nifty is suggesting about 20 points higher opening for our market.

On Friday, Nifty, after touching a high of 7560 in the morning trade, slipped to 7497 before closing at 7511. This once again reiterates the importance of 7487 bottom, a breach of which will confirm a lower-top lower-bottom formation on the daily chart.

On the way up, 7663, the top made last week, is the immediate resistance, a crossover of which is required for the further upmove.

Traders are advised to wait for this 7663-7487 range to be broken for taking fresh view on Nifty.