OIL TUMBLES TO FRESH 6-1/2 YEAR LOW; NIFTY EXTENDS CONSOLIDATION
US indices slipped 0.8%-0.9% yesterday on concerns over global growth and plunging oil prices and digesting Fed minutes.
Minutes from the latest Federal Reserve meeting said that conditions for a rate increase are "approaching" but not at hand, due primarily to inflation that is not yet moving toward the necessary conditions. "Participants observed that the labor market had improved notably since early this year, but many saw scope for some further improvement," the minutes said. This caused markets to question the possibility of a tightening in U.S. monetary policy next month.
Energy stock were hit hard as Nymex oil nosedived 4.3% to $40.80, its lowest since March 2009, after the Energy Information Administration reported an unexpected rise in crude stockpiles. Brent plunged 3.38% or $1.65 to $47.16 a barrel.
Consumer Price Index rose 0.1% in July versus the expected 0.2% increase. Godl
Earlier China's Shanghai Composite closed 1.24% higher after falling over 4% at its session lows
European markets tumbled 1.1%-2.1% with DAX leading the tally. Germany's Bundestag, its lower house of parliament, voted in favor of a Greek bailout.
After falling nearly half a percent in the initial trade, benchmark indices bounced back nearly eight tenth of a percent from bottom of the day to end higher by about a third of a percent. Sensex settled at 27932, up 100 points while Nifty gained 29 points to finish at 8495. BSE mid-cap and small-cap indices gained 0.1% and 0.2% respectively. BSE Healthcare index soared 2.6%, becoming top gainer among the sectoral indices, followed by 1.4% rise in Consumer Durable index. Metal and Realty indices were the top losers, giving away 1.3% and 1% respectively.
FIIs net sold stocks and index futures worth Rs 424 cr and 522 cr respectively but net bought stock futures worth Rs 503 cr. DIIs were net buyers to the tune of Rs 383 cr.
The Reserve Bank of India yesterday granted in-principle nod to 11 payment banks applicants which include National Securities Depository Limited (NSDL), Reliance Industries, Aditya Birla Nuvo, Airtel M Commerce, Tech Mahindra among others. A payment banks differs from conventional banks as it cannot lend to its customers. It is allowed to take deposits, allow remittances and provide simple financial products. The payment bank will need to invest 75% of its funds in government securities. The minimum capital needed to set up a payments bank is set at Rs 100 crore. The bank will be allowed to accept savings deposits of up to Rs 1 lakh from each customer.
Rupee appreciated 5 paise to end at 65.27/$.
Today morning Asian markets are trading with and SGX Nifty is suggesting about 30 points lower opening for our market.
Nifty has been consolidating for past three sessions in 8530-8430 range and we have been advising holding on to trading longs with the stop loss of 8410, which is the 61.8% retracement level of the recent 8338-8531 upmove.
That continues to be the view. On the way up, a crossover of 8530 would pave the way for the further upside till about 8610, where the trendline adjoining recent tops on the daily chart is placed.