BACK TO BREXIT WORRIES

BACK TO BREXIT WORRIES

WORLD MARKETS                             

US indices fell more than half a percent in last half an hour or so to end with cuts of a fifth of a percent, extending the losing streak to fifth straight day.

The Federal Reserve kept rates unchanged as expected. Six members projected only one hike this year, although the median expectation remained two hikes this year.

In its post-meeting statement, the Fed noted that the unemployment rate had declined but "job gains have diminished." Yellen said in a press conference following the statement release that the so-called Brexit vote, due on June 23, was also one of the factors in Wednesday's decision. Fed lowered its growth projection for 2016 to 2% from March's 2.2% and for 2017 to 2% from 2.1%.

Dollar index, after touching an intraday high of 95.04, eased to end at 94.60. Treasury yields too plunged post statement with the 2-year yield falling to near 0.67%, its lowest since mid-February, and the 10-year yield near 1.58%.

Gold gained to briefly top $1,300 an ounce, hitting its highest since early May.

US oil, after touching a high of $48.72 on the back of EIA data showing a decline of 933,000 barrels in US crude oil stocks, reversed to close 48 cents or 1% lower at $48.01 a barrel.  

In economic news, US industrial production declined 0.4% in May and April's figure was revised lower to show a 0.6% increase versus the previously reported 0.7%. May capacity utilization edged lower from the prior month to 74.9%. The producer price index rose a slightly more-than-expected 0.4% in May, following a 0.2% rise the prior month. The core PPI that excludes food, energy and trade services fell 0.1% last month after rising 0.3% in April. The June Empire State Manufacturing Survey rose to 6.0 from a negative 9 print last month.

European markets gained 0.7%-1.5%. The German 10-year bund yield traded in negative territory, but off record lows touched Tuesday.

Earlier, Shanghai Composite rose more than 1.5%, shrugging off a decision by stock index provider MSCI on Tuesday to delay inclusion of mainland-traded Chinese A-shares in its key emerging market index.

AT HOME

After a mildly higher start, benchmark indices saw significant addition to gains through the session to end with mammoth gains of about a percent and quarter, registering the largest single day gain since 26th May. Sensex settled at 26726, up 331 points while Nifty added 98 points to finish at 8207. BSE mid-cap and small-cap indices gained 0.6% and 0.8% respectively. All the BSE sectoral indices ended higher with Capital Goods and Utilities indices leading the tally, up 2.3% and 2.1% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 108 cr, 639 cr and 227 cr respectively. DIIs were net buyers to the tune of Rs 234 cr.

Rupee appreciated 11 paise to end at 67.15/$.

SBI soared 4% after the Union Cabinet approved the merger of five associate banks with SBI.

Government also approved its long-awaited National Aviation Policy, which contains various measures to boost the country's under-penetrated aviation sector and boost connectivity across towns. The 5/20 rule has been replaced with 0/20 which means airlines would continue to need 20 aircrafts to fly international but the earlier rule of 5 year experience has been done away with. Airfares for 30-minute and 1-hour flights have been capped at Rs 1200 and Rs 2500 respectively.

India's trade deficit in May stood at USD 6.27 bn, up from 4.84 bn in April. Exports fell 0.8% y-o-y to $22.2 bn and imports were down 13%. While exports were down for the 18^th consecutive month, fall this time was the lowest during this period.

OUTLOOK

Today morning Asian markets are trading with cuts of upto a percent and half with Hang Seng and Nikkei leading on the way down and SGX Nifty is suggesting about 25 points  lower start for our market.

Nifty, on Tuesday made a double bottom around Monday’s low of 8064 and rebounded sharply yesterday to end at 8221, crossing the immediate hurdle of 8215 and generating a buy on the hourly chart.

8295, the top made last week, is the next major hurdle to eye, a weekly close above which would open up the space for the further upside till about 8655, which is the top made in July 2015 and also the 52-week high.

Immediate support is placed around 8130 with the stop loss of which trading longs can be held on to. However, taking in account the looming Brexit vote and 8295 hurdle which is very close, traders would do well to keep volumes low and let the benchmark cross 8295 hurdle decisively before taking aggressive longs.

The Bank of Japan is set to release its statement on monetary policy today.