WORLD EQUITIES EXTEND FALL; NIFTY APPROACHES 8315 SUPPORT
US indices fell between 0.6%-1% yesterday, with the Dow closing near six-month low, under pressure from an overnight plunge in the Shanghai Composite and a continued decline in commodities, amid a lackluster earnings season.
Shanghai Composite yesterday dropped nearly 8.5% for its largest one-day loss since 2007 on concerns about growth. The China Securities Regulatory Commission said late Monday night that the local government will increase purchases of stocks in an effort to keep the equity market up.
Energy sector was the worst performer in the S&P 500 as oil extended losses, with Nymex oil falling 75 cents to $47.39, the lowest level since March 20. Brent fell $1.15 to $53.47 a barrel. The Thomson Reuters CRB commodities index hit its lowest level in six years. Copper futures fell more than 1.5%. Gold rebounded $11 to $1096 an ounce. Dollar index fell nearly a percent with the euro briefly creeping above $1.11.
US June durable goods data showed an increase of 3.4%, beating expectations slightly.
European markets fell 1.1%-3%. Germany's Ifo survey for July came in above forecasts, indicating business sentiment in the euro zone's largest economy had picked up.
Benchmark indices plunged nearly 2% yesterday amid negative global cues and jitters over a recommendation for stiff norms for participatory notes or P-Notes. Sensex nosedived 551 points to settle at 27561, marking the lowest close since 19th June. Nifty ended at 8361, down 161 points. BSE mid-cap and small-cap indices lost 1.4% and 1.1% respectively. All the BSE sectoral indices ended in red with Capital Goods and Metal indices leading the tally, down 2.8% and 2.3% respectively.
A Supreme Court-appointed Special Investigation Team (SIT) entrusted with the task of suggesting measures to curb black money recommended SEBI should do more to identify real owners of P-notes and restrict their transfer last week.
FIIs net sold stocks, index futures and stock futures worth rs 860 cr, 1414 cr and 799 cr respectively. DIIs were net buyers to the tune of Rs 239 cr.
Rupee depreciated 13 paise to end at 64.16/$.
Today morning, Shanghai is down nearly 4%, other Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 40 points lower opening for our market.
In yesterday's report we had clearly mentioned that Nifty had generated sell on the hourly chart and is headed to 8470 below which 8415, the 34 DMA, would be the next support.
The benchmark plunged 161 points to end at 8361, achieving the targets mentioned above and vindicating our view.
After yesterday's fall, Nifty is very close to immediate previous bottom of 8315, a breach of which will negate the higher-top higher-bottom formation on the daily chart. Also the lower band of bollinger on the daily chart is also placed in the vicinity of 8300 which makes 8300-8315 important support area.
Traders are advised to book some profits in short positions in the vicinity of 8315.
Tech Mahindra reported in-line with estimated half a percent q-o-q rise in dollar revenue at USD 989 mn. Rupee revenues rose 2.9% to Rs 6294 cr, profit climbed 43% to Rs 676 cr and were better-than-estimates. EBIT margin declined 26 bps to 12.1%.
Maruti Suzuki, HDFC and PNB will report their quarterly earnings today.