NIFTY TAKES OUT 8150-8188 HURDLE; STAY LONG WITH THE STOP LOSS OF 8125
US indices soared 1.6%-1.9% yesterday, extending recovery to second straight day from post-Brexit plunge, supported by rising oil prices and realization that any change to the status quo in the European Union after the Brexit vote is unlikely to change in the short-term.
US oil soared $2.03 or 4.24% to $49.88 a barrel after EIA weekly crude inventories showed a greater-than-expected drawdown of 4.05 million barrels.
Dollar index eased for the second consecutive day to 95.65 from 96.04 the previous day. Pound too extended the recovery to second straight day to close at 1.3446/$ as against previous close of 1.3351/$. Gold gained $9 to $1327 an ounce.
In U.S. economic news, pending home sales fell a more-than-expected 3.7% in May from the prior month, for a 0.2% y-o-y decline and the first annual drop in two years. Consumer spending rose 0.4% in May. Personal income increased 0.2%.
European markets climbed 1.8%-3.6% with FTSE leading the tally and erasing all of the losses it made after the Brexit vote. Outgoing UK Prime Minister David Cameron addressed parliament saying that the U.K. economy faced turbulent times ahead, following its decision to leave the EU. He added that the new prime minister could begin negotiations with the bloc about its exit before the "Article 50" process is triggered.
After a positive start, benchmark indices saw significant addition to gains through the session to end higher by just under a percent, extending the winning streak to third straight day. Sensex soared 216 points to settle at 26740 while Nifty ended at 8204, up 76 points. BSE mid-cap and small-cap indices rose 1% and 13% respectively. Except a 0.1% lower FMCG index, all the sectoral indices closed in green with Realty index leading the tally, up 3.2%, followed by 1.9% rise in Utilities index.
FIIs net bought stocks, index futures and stock futures worth Rs 103 cr, 683 cr and 399 cr respectively. DIIs were net sellers to the tune of Rs 20 cr.
Rupee appreciated 27 paise to close at 67.68/$.
Union Cabinet yesterday cleared recommendations of 7th Pay Commission which will benefit over one crore government employees and pensioners. The Commission had recommended a 23.55% overall hike in salaries, allowances and pension involving an additional burden of Rs 1.02 lakh crore, or nearly 0.7% of GDP.
Cabinet also cleared the National Mineral Exploration Policy, paving the way for auction of 100 prospective mineral blocks. The policy will also provide a fillip to private sector participation and investment in exploration allowing them to carry out regional and detailed mineral exploration. According to the policy, mining companies will get a share of revenue from mineral exploration to host state.
Also approved was Model Shop & Establishment Act, which enables states to choose to keep shops and other such establishments open 24x7 all through the year. The move, which is likely to prove highly beneficial for restaurants, malls, movie theatres and other entertainment entities, among others will also help bring incremental tax income into the government’s kitty and generate employment.
The monsoon session of the Parliament will be held between July 18 to August 12.
Today morning, except a flat Shanghai, other Asian markets are trading with gains of 0.5%-1.5% and SGX Nifty is suggesting about 35 points higher start for our market.
Ever since Nifty started recovering post Brexit vote plunge, we were working with the resistance area of 8150-8188 where 8150 was the 61.8% retracement level of the recent 8286-7927 fall while 8188 was the upper level of the gap created by the gap down opening on Friday.
Nifty yesterday crossed both these hurdles decisively by closing at 8204. 8295, the top made in early June, is the next big hurdle to eye, a decisive crossover of which would open up the space for the further upside till 8655, which is the top made in July 2015.
Immediate support on the hourly chart is placed around 8215, with the stop loss which trading longs can be held on to.