NIFTY BACK TO 7980 HURDLE AFTER A DRAMATIC REBOUND

NIFTY BACK TO 7980 HURDLE AFTER A DRAMATIC REBOUND

WORLD MARKETS                             

Dow and S & P 500 ended marginally higher while Nasdaq lost 0.2% yesterday as energy stocks gained while healthcare and information technology stocks declined.

Nymex oil rose $1.40 or 3.3% to $44.04 a barrel after American Petroleum Institute reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week, versus a 2.4 million-barrel build forecast.

3M earnings beat on both the top and bottom line. DuPont earnings topped expectations and the company raised its forecast for 2016, citing a weakening of the dollar against "most currencies. Procter & Gamble reported better-than-expected earnings but revenue miss, which fell for a seventh-straight quarter.

Standard & Poor's lowered Exxon Mobil's credit rating to AA+ from AAA, saying low oil prices would make it difficult for the company to keep funding high dividends and share purchases for the next few years.

Durable goods orders rose a less-than-expected 0.8% in March after a downwardly revised 3.1% decline in February. The S&P/Case-Shiller 20-City home price index rose 5.4% in February, down from 5.7% the prior month. The flash Markit services PMI rose to 52.1 in April from 51.3 last month. Consumer confidence for April was 94.2.

In Europe, CAC and DAX fell a third of a percent while FTSE rose 0.4% and Italy climbed a percent and half. Oil major BP reported a pretax loss of $865 million in the first quarter of 2016 on account of low oil prices. Standard Chartered bank surged nearly 10% after the group reported a pre-tax profit of $589 million, showing signs of a turnaround.

AT HOME

After falling about half a percent in the opening trade, benchmark indices saw a mammoth rebound through the session to end higher by about a percent and third. Sensex added 328 points to settle at 26007 while Nifty finished at 7963, up 108 points. Both the indices closed at the highest level since 1st January. All the BSE sectoral indices closed in green with Bankex and Metal index leading the tally, up 2% each.

FIIs net bought stocks and index futures worth Rs 512 cr and 994 cr respectively but net sold stock futures worth Rs 871 cr. DIIs were net buyers to the tune of Rs 21 cr.

Rupee appreciated 9 paise to end at 66.52/$.

Maruti reported 11.7% dip in Jan-March quarter net profit at Rs 1134 cr on account of loss of 10000 units due to reservation agitation, increased advertising expenses and lower other income. Total income rose 12.3% to Rs 15306 cr. EBIDTA rose 8.5% to Rs 2350 cr while EBIDTA margin stood at 15.3% against 15.8% yoy. 

Axis Bank, as against expectation of a 7% fall, reported 1.2% dip in Q4 net profit at Rs 2154 cr. NII rose at better-than-expected 19.8% to Rs 4552 cr. Asset quality held steady, with the gross non performing asset (GNPA) and net NPAs coming at 1.67% (versus 1.68%) and 0.7% (vs 0.75%) sequentially. The bank however said that assets worth Rs. 22628 cr are under pressure out of which 60% can turn bad in 2 years.

OUTLOOK

Today morning Asian markets are trading with modest cuts and SGX Nifty is suggesting about 10 points lower opening for our market.

Nasdaq future is down more than a percent, tracking about 8% fall in Apple shares in after-hours trading on disappointing earnings. The tech giant reported fiscal second-quarter earnings of $1.90 per share on $50.5 billion in revenue as against expectations of earnings of about $2 a share on $51.9 billion in revenue.

After Nifty generated sell on the hourly chart by breaking the 7840 support, we were expecting next support to come in 7770-7720 region. The benchmark however, after touching a low of 7822 in the initial trade, rebounded sharply to close at 7963.

After this mammoth rebound, Nifty is back in the vicinity of 7980 hurdle, a decisive crossover of which would pave the way for the further upside till about 8150, where 20-month moving average is placed.

Traders can initiate fresh longs upon crossover of 7980 with the stop loss of 7900, which is the immediate support on the hourly chart.

YES Bank and Bharti Airtel will report their quarterly earnings today.

US Fed will conclude its two day meeting today. While no move on rates is expected, markets will watch out for clues on the timing of the next hike.