NIFTY SNAPS TWO-DAY LOSING STREAK; KEY EARNINGS IN FOCUS
US indices ended mixed yesterday after second quarter GDP data came in better-than-expected and the Fed continued tapering asset purchases. Nasdaq gained 0.5%, S & P 500 ended absolutely flat while Dow lost 0.2%.
Federal Reserve, as expected, cut another $10 bn from its monthly bond buys and left its short-term interest rate target near zero. Fed Bank of Philadelphia President Charles Plosser was the sole dissenter, objecting to the "considerable time" phrasing as related to the window of how long the central bank would wait until it begins raising the Fed funds rate.
Earlier, the Commerce Department reported the economy grew 4% in the second quarter, with the faster-than-estimated pace fueling speculation that the Fed could move on rates more quickly than anticipated. Separately, ADP reported the private sector added 218,000 jobs in July.
Treasuries plunged, with the benchmark 10-year yield surging 10 basis points to 2.556%. Gold fell $3.4 to $1295 an ounce and Nymex crude shed 70 cents to $100.3 a barrel.
European markets, except a 0.3% rise in Spain, fell between 0.5%-1.2%, reacting to fresh sanctions against Russia and corporate earnings. Spain's economy grew by 0.6% in the last quarter, marking the fastest pace in over six years and beating expectations.
After trading with a negative bias for better part of the day, benchmark indices spiked up in the late noon trade to end with gains in the vicinity of half a percent, snapping a two-day losing streak. Sensex climbed 96 points to settle at 26087 while Nifty finished at 7791, up 43 points. BSE mid-cap index gained 0.4% but the small-cap index ended a tad lower. Except a 4.7% and 0.2% cut in BSE Capital Goods and IT indices, all other sectoral indices ended in green with Bankex and Consumer Durable indices leading the tally, putting on 1.6% and 1.5% respectively.
FIIs net sold stocks and stock futures worth Rs 382 cr and 373 cr respectively but net bought index futures worth Rs 639 cr. DIIs were net buyers to the tune of Rs 516 cr.
Rupee appreciated 6 paise to close at 60.06/$.
L & T plunged after the quarterly earnings revealed that the company's Hydrocarbons business (such as pipelines for oil and gas companies in India and abroad), which is among the fastest growing and most promising segments, halved in revenues and turned loss-making at the pre-tax levels over the year ago.
Lupin reported better-than-expected 56% y-o-y growth in June quarter net profit at Rs 625 cr. Revenues rose 34.9% to Rs 3340 cr. EBIDTA margins soared to 33.9% from 24.4% y-o-y.
Dr Reddy met street expectations with the consolidated net profit rising 52.4% y-o-y to Rs 550 cr. Revenue grew 23.6% to Rs 3517 cr. Operating margin expanded by 500 bps to 25%.
Today morning, Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a flattish start for our market.
Yesterday, after touching a low of 7707, Nifty rebounded sharply to close at 7791. Ever since Nifty achieved 7809 target, we have been advising keeping trading volumes low and remaining on sidelines while Nifty consolidates.
That continues to be the view. 7840, the all-time high made last Friday is the immediate resistance above which 7900, where the trendline adjoining two recent tops on the daily chart is placed, would be the next target. 34 DMA has moved up to 7630 and that would be the important support to watch on the day down if 7707, the low made yesterday, breaks.
HCL Tech, ICICI Bank, Maruti and Tech Mahindra will report their quarterly earnings today.