US EQUITIES PLUNGE ON RISING DOLLAR, RATE HIKE FEAR; EARNINGS DISAPPOINT AT HOME

US EQUITIES PLUNGE ON RISING DOLLAR, RATE HIKE FEAR; EARNINGS DISAPPOINT AT HOME

WORLD MARKETS                             

US indices plunged nearly a percent on the back of renewed strength in the U.S. dollar and mixed data that could strengthen the case for a rate hike.

Dollar index climbed 1.3% to 97.22. Euro traded below $1.09 for the first time since April 28.

Durable goods for April showed a decline of 0.5%, roughly in-line with expectations. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1% last month after an upwardly revised 1.5% increase in March. New home sales for April showed an increase of 6.8% to a seasonally adjusted annual rate of 517,000, up from the consensus 510,000. The S&P/Case-Shiller composite index of 20 metropolitan areas gained 5% in March on a year-over-year basis, matching February's gain and above the forecast of 4.7%. The Conference Board Consumer Confidence report was 95.4 in May, above the revised April read of 94.3.

On the flip side, Markit's Purchasing Managers Index for the services sectors fell for a third straight month in May to 56.4 from April's final read of 57.4.

U.S. Federal Reserve Vice Chairman Stanley Fischer said Tuesday that markets should not be surprised by the timing or pace of rate hikes.

European markets fell between 0.6%-1.6% with DAX leading the tally. Concerns over Greece persisted. The country needs urgent aid to repay a loan due next week to the International Monetary Fund and to pay wages and pensions, its government said on Monday. The Greek finance ministry will hold a teleconference with European officials on Tuesday evening.

Nymex oil plunged 2.8% or $1.7 to $58 a barrel. Gold fell $17 to $1187 an ounce.

AT HOME

After falling nearly six tenth of a percent, benchmark indices recouped some of the lost ground in last hour or so to end lower by about four tenth of a percent. Sensex settled at 27531, down 112 points while Nifty lost 31 points to finish at 8339. BSE mid-cap and small-cap indices lost 0.01% and 0.2% respectively. Except a 0.1% and 0.02% rise in Bankex and Power index respectively, all the sectoral indices ended in red with BSE Oil & Gas and Realty indices leading the tally with losses of 1% and 0.9% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 115 cr, 216 cr and 193 cr respectively. DIIs were net buyers to the tune of Rs 124 cr.

Rupee plunged 41 paise to end at 63.98/$.

Tata Motors reported a 56% decline in consolidated net profit at Rs 1,716.50 crore March quarter as its domestic business continue to drag, while British arm Jaguar Land Rover also witnessed weak demand. Consolidated net revenues rose 3.5% to Rs 67576 cr. Operating profit dropped 15.6% to Rs 8439 cr and margin declined 280 bps to 12.5%. JLR margin dipped 120 bps sequentially to 17.4%. The company skipped dividend for the first time after 10 years.

BHEL reported better-than-estimated 52% fall in net profit at Rs 888 cr. Sales slipped 16% to Rs 12368 cr. Operating margin stood at 11% as against 16.7% y-o-y.

Tech Mahindra reported 39.2% q-o-q fall in net profit at Rs 472 cr. Margins dipped 530 bps to 12.4% as against expectation of 15%. Dollar revenues rose 6.5% q-o-q to 984 mn but stripped off the acquisitions, dollar revenues declined 4.3%. On constant currency basis revenue were down 1.2%.

OUTLOOK

Today morning Asian markets are trading flat to modestly lower and SGX Nifty is suggesting about 40 points lower opening for our market.

In yesterday's report we had mentioned that Nifty had broken immediate support of 8380 and next support to eye is 8320 where the 200 DMA as well as a trendline adjoining recent bottoms on the daily chart is placed.

Nifty, after touching a low of 8320, recovered somewhat to end at 8339.

8320-8300 continues to be immediate support zone where 8320 is the 200 DMA while 8300 is the 38.2% retracement level of the recent 7997-8490 upmove. A breach of 8300 can take Nifty to around 8185, which is the 61.8% retracement level of the 7997-8490 upmove.

On the way up 8410 is the immediate hurdle above which 8490, the top made last week, would be the bigger hurdle to eye.

Traders can go short if Nifty sustains below 8300 with the stop loss of 8410.