Thursday, June 2, 2016



WORLD MARKETS                             

US indices, after opening about half a percent lower, recovered through the session to end marginally in the green.

ISM manufacturing PMI for May came in at 51.3, topping expectation and improving from previous month's 50.8 reading. The final read for May on Markit's manufacturing PMI was 50.7. The flash read was 50.5, down from 50.8 in April. May auto sales came in slightly above expectation at 17.45 million.

US oil futures fell below $48 after API data showed a surprise build of 2.4 million barrels, but rebounded from there to settle 9 cents down at $49.01 a barrel. Recovery was on the back of reports that OPEC would discuss an output limit at its meeting on Thursday. Brent futures fell 0.34% to $49.72 a barrel. April construction spending fell 1.8%.

The Fed's Beige Book said there was modest economic growth since the last report. The Beige Book also said tight labor markets were pushing up wages.

European markets fell 0.6%-1.2% on the back of sharp decline in banks and miners. Markit's final euro zone manufacturing PMI came in at 51.5 in May, unchanged from the flash read and a touch below April's 51.7 print.

Dollar index fell about half a percent to 95.42.

Earlier, Nikkei fell 1.6%. Yen strengthened to 109.05 after Japanese Prime Minister Shinzo Abe announced a two-and-a-half year delay in a scheduled sales tax increase, putting plans for fiscal reforms on the back burner due to growing signs of economic weakness.

In China, the Markit Caixin manufacturing PMI fell to 49.2 in May, below expectations and down from 49.4 in April, and below the neutral 50.0 value for the 15th-straight month. The official manufacturing PMI was unchanged from the prior month in May at 50.1. The official services PMI edged lower to 53.1 in May from 53.5 in April.


After gaining about two third of a percent in the morning trade, benchmark indices gave away majority of the gains in the noon trade to end higher by about a fifth of a percent. Sensex settled at 26714, up 46 points while Nifty added 20 points to finish at 8180. BSE mid-cap index lost 0.3% while small-cap index gained 0.2%. BSE Telecom index climbed 2.8%, becoming top gainer among the sectoral indices, followed by 1.6% rise in FMCG index. Bankex and Finance indices were the top losers, down 1.2% and 0.7% respectively.

FIIs net bought stocks and stock futures worth Rs 260 cr and 561 cr respectively but net sold index futures worth Rs 287 cr. DIIs were net sellers to the tune of Rs 160 cr.

Rupee depreciated 18 paise to end at 67.45/$.

Maruti Suzuki sold 1.23 lakh vehicles in May, a growth of 7.1% y-o-y. M & M sold 11% more vehicles at 40656 units. Ashok Leyland sold 6% more vehicles at 9290 units. Eicher sold 5771 commercial vehicles, a growth of 43% while Royal Enfield sales growth was 37% at 48000 units. TVS Motor sold 2.44 lakh units, a growh of 11%. Hero MotoCorp registered 2% growth at 583117 units. Tata Motors sales were up 1% at 40071 units.


Today morning, Nikkei is down more than a percent and half, other Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 10 points lower start for our market.

As we have been mentioning, 8243, which is the 61.8% retracement level of the entire 9119-6826 fall, is the important hurdle to eye, a decisive crossover of which is required for the fresh upmove.

Nifty, for the second consecutive day, went close to 8240 mark but retreated to end at 8180.

8336, the top made in October 2015, would be the next target once 8240 is taken out. Nearest support on the hourly chart has moved up to 8100, which should serve as the stop loss for existing longs.

Key events to watch out today would be OPEC meeting and ECB policy review. In case of later, markets will be looking to see if the ECB changes its inflation forecast and gives any hints about further monetary policy moves.

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