Thursday, July 17, 2014

PRUDENT MORNING MANTRA - 17.07.2014

NIFTY TAKES OUT 7600 HURDLE; STAY LONG WITH THE STOP LOSS OF 7520

WORLD MARKETS

US indices gained between 0.2%-0.4% yesterday, with Dow scaling fresh all-time high as investor sentiment was lifted by corporate earnings and deals.

Technology shares rallied in the wake of earnings from Intel, with the chip maker forecasting third-quarter revenue above market estimates. Apple and International Business Machines gained after saying they would jointly develop applications for business users and mobile devices. Bank of America fell after reporting a drop of 43% in second-quarter profit and a 10-cent miss on earnings per share.

Federal Reserve's Beige Book found the economy expanding at a modest to moderate pace, with consumer spending up in all of of the Fed's districts. U.S. producer prices rose 0.4% in June, versus expectations of a 0.2% increase. Another report had U.S. factory output increasing for a fifth month in June. A monthly survey from the national Association of Home Builders rose 4 points in July to 53, crossing the line into positive territory.

Dallas Fed President Richard Fisher on Wednesday said the Fed would likely start hiking interest rates early next year, if not sooner.

European markets surged between 1.1%-3.2% as investors reacted to fresh growth data from China. Data from the U.K. showed unemployment there had fallen to the lowest level since late 2008.

China's economy grew 7.5% in the second quarter, above estimates for a 7.4% increase. Other data had June industrial output rising at a stronger-than-expected 9.2% percent and retail sales increasing at an annualized 9%.

Nymex crude rose 1.2% to $101.2 a barrel and gold gained 0.2% to $1300 an ounce.

AT HOME

After a gap up opening, benchmark indices traded in a narrow range through the session but saw a sharp spike up in last hour of trade to end with hefty gains of a percent and quarter. Sensex surged 321 points to settle at 25550 while Nifty finished at 7624, up 98 points. BSE mid-cap and small-cap indices lost 1.3% and 2% respectively. All the BSE sectoral indices closed in green with Realty index leading the tally, putting on 4.3%, followed by 2.5% rise in Bankex.

IDFC surged after the RBI allowed banks to raise long-term funds to lend to affordable housing and infrastructure. IDFC obtained a banking license in April, and is seen as one of the main beneficiaries of these measures.

India's trade deficit for June touched an 11-month high at $11.76 bn. Exports rose 10.2% y-o-y to USD 26.48 bn while imports rose 8.3% to USD 38.24 bn.

Kotak Mahindra Bank reported 11.3% rise in consolidated net profit at Rs 698.3 for the quarter ended June 2014. Consolidated NII rose 9.9% to Rs 1510 cr. Gross NPAs declined 1.56% from 1.63% q-o-q  while net NPAs improved to 0.81% from 0.88%.

FIIs net bought stocks and stock futures worth Rs 622 cr and 741 cr respectively but net sold index futures worth Rs 25 cr. DIIs were net sellers to the tune of Rs 48 cr.

Rupee ended absolutely flat at 60.12/$.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 10 points higher opening for our market.

In yesterday's report we had mentioned that Immediate resistance on the hourly chart is placed around 7600, a crossover of which is required to generate a buy signal on the hourly chart, upon happening which 7808, the all time high made earlier in the month, would be the next target to eye.

Nifty yesterday soared 98 points to close at 7624, crossing the 7600 hurdle and generating a buy signal on the hourly chart. Immediate target on the way up is 7731, which is the immediate previous top on the hourly chart above which 7808 would be the next target.

Immediate support on the hourly chart is placed at 7520, with the stop loss of which trading longs should be held on to.

TCS and Bajaj Auto will report their quarterly earnings today.

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