A DRAMATIC REBOUND FROM AN ANTICIPATED SUPPORT ZONE

A DRAMATIC REBOUND FROM AN ANTICIPATED SUPPORT ZONE

WORLD MARKETS                             

US indices gained about half a percent, reacting to better-than-expected earnings from Coca-Cola, McDonald's and Boeing and signs of strength in the housing market.

In an encouraging sign that the housing market is picking up, total mortgage application volume rose 2.3% week to week on a seasonally adjusted basis for the week ending April 17th. Existing home sales data for March beat expectations at 5.19 million. The FHFA house price index for February showed a 0.7% increase from the previous month.

Shares of Visa and MasterCard closed up about 4% following China's announcement that the country will open its market for clearing domestic bank card transactions.

European markets ended mixed after digested a slew of earnings from European companies. FTSE and DAX fell about half a percent while France and Italy rose a third of a percent. Greek Finance Minister Yanis Varoufakis said on Tuesday that he was confident Greece would reach a deal with its international lenders, although this may not happen in the upcoming meeting of euro zone finance ministers on April 24.

Gold fell $16.20 to $1187 an ounce. Nymex crude fell 0.8% to $56.16 a barrel.

AT HOME

After falling more than a percent, benchmark indices saw a dramatic, more than a percent and a half, surge in the late noon trade to end higher by nearly two third of a percent, snapping a five day losing streak. Sensex settled at 27890, up 214 points while Nifty finished at 8430, up 52 points. BSE mid-cap index gained 0.4% while the small-cap index ended a tad lower. BSE Capital Goods and Healthcare indices were the top gainers among the sectoral indices, rising 1.9% and 1.2% respectively while IT and Oil & Gas indices lost 0.7% and 0.4% respectively.

FIIs net sold stocks worth Rs 910 cr but net bought index futures and stock futures worth Rs 35 cr and 60 cr respectively. DIIs were net buyers to the tune of Rs 218 cr.

Rupee appreciated 3 paise to end at 62.82/$.

Indian Meteorological Department released its first forecast for the south-west monsoon and said that the rains are expected to be 93% of a long-term average. Moreover it said that there is 28% probability of a normal monsoon, 35% probability of a below normal monsoon and 33% probability of a deficient monsoon.

In an important development, Revenue Secretary Shaktikanta Das, Central Board of Direct Taxes (CBDT), Chairperson Anita Kapur and Minister of State for Finance Jayant Sinha told investors in a conference call that MAT would not be levied on funds that have invested through countries such as Singapore and Mauritius with which India has a double taxation avoidance agreement (DTAA).

OUTLOOK

China's HSBC flash manufacturing PMI for April has come in at 49.2 as against the final reading of 49.6 in March.

Shanghai has marginally dipped into the negative territory after the data but other Asian markets are trading with average gains of half a percent. SGX Nifty is suggesting about 35 points higher opening for our market.

In yesterday's report we had reiterated our stance that Nifty is close to some crucial support levels and had advised booking profits in short positions considering the oversold status on the hourly chart along with formation of a positive divergence.

The benchmark touched a low of 8285, nearly retesting the 8269 bottom made in March and bounced back sharply to end at 8430, vindicating our view.

The recovery might extend itself in today's session. Immediate resistance to watch on the hourly chart is 8545, a crossover of which would be needed to generate a buy on the hourly chart.

On the way down 8269 continues to be crucial support to eye. 

HDFC Bank and Cairn India will report its quarterly earnings today.