8080 IS THE IMMEDIATE SUPPORT; 8270 IMMEDIATE HURDLE
US indices gained 0.2%-0.4% amidst mixed economic data and optimism over Greece debt talks.
ADP private sector payrolls increased 201000 in May with the service sector boosting the figure to above the expected 200000. US trade deficit shrunk to $40.9 billion in April from March's revised deficit of $50.6 bn as exports of services hit a record high and imports fell. The ISM non-manufacturing index for May came in at 55.7, nearly a year low. The Markit Services PMI for May showed a slight decline from April and came in below expectations at 56.2.
Greek stocks soared ~4% after the Financial Times reported details of a draft proposal from Greece's creditors that include the requirement for Greece to post a primary budget surplus of 1% of GDP this year. This would be expected to rise to 3.5% in 2018 and is significantly below the target of 3% included in the country's existing EU/IMF bailout.
The US dollar reversed early gains to fall about half a percent to 95.37. The euro topped $1.12. US 10-year treasury yield hit 2.38%, topping both its year-to-date intraday and closing high. The 10-year Bund yield jumped to trade near 0.89%, a high for 2015.
Nymex oil fell $1.62 or 2.64% to $59.64 a barrel. Gold fell $10 to $1185 an ounce.
Key European markets gained 0.3%-0.8%.
ECB, as expected, left the benchmark interest rate unchanged at 0.05%. At a press conference, ECB President Draghi reaffirmed the continuation of ECB's asset purchase program and said the central bank wants Greece to stay in the euro zone. He also raised inflation expectation for this year to 0.3%. Inflation next year is seen at 1.5%.
Eurozone final composite PMI for May came in at 53.6, above an earlier estimate but down from April. The rate of unemployment in the euro area fell slightly to 11.1% in April from 11.2% in March.
Carnage on Dalal Street continued as benchmark indices plunged another percent and a quarter yesterday after falling nearly two and a half percent the previous day. Sensex slumped 351 points to settle at 26837 while Nifty finished at 8135, down 101 points. BSE mid-cap and small-cap indices lost 1.4% and 2% respectively. Except a 0.2% rise in BSE IT index, all the sectoral indices ended in red with Realty and FMCG indices leading the tally, giving away 5.5% and 3.4% respectively.
FIIs net sold stocks and index futures worth Rs 728 cr and 577 cr respectively but net bought stock futures worth Rs 31 cr. DIIs were net buyers to the tune of Rs 413 cr.
Rupee depreciated 8 paise to end at 63.89/$.
Today morning Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 15 points higher start for our market.
We had turned our near term outlook negative after the benchmark broke immediate support of 8350. We had also said that the immediate support on the way down is 8185, which is the 61.8% retracement level of the 7997-8490 upmove, below which a possibility of retest of the 7997 bottom would open up.
The benchmark yesterday touched a low of 8094 from where it rebounded to end at 8135. The lower band of bollinger on the daily chart is placed around 8080 which was instrumental in the bounceback seen yesterday. A breach of 8080 can take Nifty to 7997.
8270, the earlier bottom on the daily chart, would now act as the immediate hurdle.
Traders should trail the stop loss in short position to 8270.