DOW FALLS FOR THE SEVENTH DAY; NIFTY EXTENDS CONSOLIDATION

DOW FALLS FOR THE SEVENTH DAY; NIFTY EXTENDS CONSOLIDATION

WORLD MARKETS                             

US indices fell a fourth of a percent on Friday, with the Dow extending the losses to seventh straight day, on the back of declines in oil prices and upbeat job growth data that was seen as putting the Federal Reserve on course for a potential rate hike in September.

Nymex oil fell 79 cents or 1.8% to $43.87 a barrel, its lowest level since March 17. Brent hit a fresh 6-month low of $48.55.

July nonfarm payrolls report showed an addition of 215000 jobs, slightly below estimates for 223000. The unemployment rate was 5.3% and average hourly earnings rose 0.2%, as expected.

In other economic reports, Small Business Employment Index showed hiring increased 0.22% in July, breaking a six-year trend of negative reads for the month. May consumer credit was revised up to $16.52 billion from $16.09 billion.

European markets fell between 0.4%-0.8%

For the week, US indices lost 1.2%-1.8%. European markets, except a marginally lower Spain, gained 0.3%-1.6% with CAC and DAX leading the tally.

AT HOME

Benchmark indices ended lower by about a fourth of a percent after a choppy trade on the last day of the week. Sensex settled at 28236, down 62 points while Nifty lost 24 points to finish at 8565. BSE mid-cap and small-cap indices lost 0.2% and 0.1% respectively. BSE Oil & Gas index surged 2%, becoming top gainer among the sectoral indices, followed by half a percent higher Consumer Durable index. Power and Metal indices were the top losers, down 1.5% and 0.9% respectively.

FIIs net sold stocks and stock futures worth Rs 94 cr and 502 cr respectively but net bought index futures worth Rs 85 cr. DIIs were net buyers to the tune of Rs 34 cr.

Rupee depreciated 5 paise to end at 63.81/$.

BHEL plunged after reporting 82.5% fall in first quarter net profit at Rs 33.9 cr. Revenue dropped 15.5% to Rs 4281 cr, as against the expectation of 2.2% fall. Company posted an EBIDTA loss of Rs 209 cr as against estimate of profit of Rs 299 cr.

M & M reported 7% fall in consolidated net profit at Rs 831 cr while revenue declined 3.9% to Rs 9437 cr. Profit figure was better-than-estimated while revenue was lower-than-estimates. Consolidated operating profit declined 4.7% to Rs 1353 cr while margin remained unchanged at 14.3%, better than the estimate of 12.53%.

Tata Motor reported worse-than-estimated 48.7% dip in consolidated net profit at Rs 2769 cr. Revenue fell 5.7% to Rs 61020 cr.  Consolidated operating margin dropped 230 bps to 14.9%. JLR registered 29% drop in bottomline and 6.6% fall in topline.

For the week, Sensex and Nifty gained 0.4% each.

OUTLOOK

Data released yesterday showed that China's July producer prices fell 5.4% y-o-y, compared with an expected 5% drop, marking the worst reading since October 2009 and the 40th straight month of price decline. Consumer inflation remained muted at 1.6%, in line with forecasts and slightly higher than June's 1.4%. Exports tumbled 8.3% in July, marking their biggest fall in four months on the back of weaker global demand for Chinese goods and a strong yuan.

Today morning Shanghai is up nearly 2%, other Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 25 points lower opening for our market.

Nifty has been in consolidation mode over last couple of sessions and we have been advising holding on to trading longs with a trailing stop loss. 8500, the 38.2% retracement level of the recent 8322-8606 upmove, is the immediate support, with the stop loss of which trading longs can be held on to. 8650-8670 continues to be the major resistance area.