Wednesday, September 3, 2014

PRUDENT MORNING MANTRA - 03.09.2014

COMMODITIES CRUMBLE ON STRONG DOLLAR; STAY LONG WITH THE STOP LOSS OF 7960

WORLD MARKETS

Dow and S & P 500 ended modestly lower as strong dollar weighed on commodity prices and shares of related companies.

The U.S. dollar index jumped to 82.97, marking an over one-year high on robust economic data. The pace of manufacturing growth soared to a three-year high in August while July construction spending was at its highest in over five years.

European markets ended flat to modestly higher. Data for the euro zone showed that producer prices fell 0.1% on the month in July, as expected. Year on year, prices fell 1.1%. Construction data for the U.K. showed a better-than-expected rise, with the index hitting its strongest in seven months in August.

Strong dollar pushed Brent crude to $100.44/bbl, its lowest level since May 2013 and gold plunged nearly 2% to $1267 an ounce. Nymex crude plunged more than 3% to $92.9 a barrel.
                                                             
AT HOME

It was yet another record setting day as benchmark indices gained nearly two third of a percent to scale fresh all-time high. Sensex climbed 152 points to settle at 27019 while Nifty finished at 8083, up 55 points. BSE mid-cap and small-cap indices gained 0.8% and 0.9% respectively. BSE Consumer Durable and Healthcare indices gained the most among the sectoral indices, rising 2.8% and 1.8% respectively whereas Metal and Power indices lost 0.8% and 0.02% respectively.

FIIs net bought stocks and index futures worth Rs 673 cr and 190 cr respectively but net sold stock futures worth Rs 87 cr. DIIs were net sellers to the tune of Rs 168 cr.

Rupee fell 16 paise to close at 60.68/$.

OUTLOOK 

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

In yesterday's report we had reminded of 8150 target projected in our SAMVAT report published on 1st November 2013. Nifty yesterday touched a high of 8102 before closing at 8083.

8150 continues to be the target on the way up and "hold trading longs with a trailing stop loss" continues to be the advise. Immediate support on the hourly chart has now moved up to 7960, which should serves as the new stop loss.


India’s HSBC Services PMI for August will come out on today. In July, the data had shown deterioration to 52.2 from 54.4 in June. 

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