Tuesday, August 26, 2014

PRUDENT MORNING MANTRA - 26.08.2014

MARKETS GET A COAL JOLT

WORLD MARKETS

US indices gained about half a percent yesterday, with the S & P 500 crossing 2000 for the first time before closing at 1998,  lifted by a round of corporate deals and optimism that the European Central Bank would embark on further moves to stimulate the European economy.

New home sales for July came in lower than expected at 412000 and fell for the second consecutive month. Also, US service sector activity slowed more than expected in August.

European markets surged about 2%. Germany's widely-watched Ifo business climate index fell to 106.3 in August, below market expectations.

Nymex Crude fell 30 cents to $93.4 a barrel.

AT HOME

After rising nearly two third of a percent, benchmark indices sold-off in the late noon trade on the back of Supreme Court decision on coal block allocation to end flat to marginally lower. Sensex gained 17 points to settle at 26437 while Nifty finished at 7906, down 7 points. BSE mid-cap and small-cap indices lost 0.6% and 0.4% respectively. BSE Metal index nosedived 4.3%, becoming top loser among the sectoral indices, followed by 2% cut in Realty index. FMCG and IT indices gained 1% each.

Market, especially metal stocks, tumbled after the Supreme Court deemed all coal block allocations made since 1993 as illegal. The court will take a decision on re-allocation of mines on 1 September, 2014 and will reserve cancellation on a case-by-case basis.

FIIs net bought stocks, index futures and stock futures worth Rs 127 cr, 192 cr and 168 cr respectively. DIIs were net buyers to the tune of Rs 46 cr.

Rupee depreciated 10 paise to close at 60.56/$.

OUTLOOK

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

Yesterday, after touching a fresh all-time high of 7968, Nifty sold-off to close at 7906. 7855 continues to be the immediate support, a breach of which would generate a sell on the hourly chart and would pave the way for further correction. 8000 continues to be the immediate target on the way up.

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