NIFTY SET TO CHALLENGE 8295 HURDLE; 8150 IS THE IMMEDIATE SUPPORT

NIFTY SET TO CHALLENGE 8295 HURDLE; 8150 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices, after climbing nearly a percent and half in the initial trade on easing Brexit fears, gave away nearly half of the gains though the session to end with gains of 0.6%-0.8%.

WTI crude rose 2.9% to $49.37 a barrel. Brent gained 3% to $50.65.

U.S. Treasury yields rose, with the 2-year yield around 0.73% and the 10-year yield around 1.67%. The 10-year German bund yield held in positive territory after falling into negative territory last week for the first time.

Dollar index fell more than half a percent. The pound surged more than 2% against the dollar to trade near $1.467. Gold closed off the day low at $1292, down $3.

European markets soared 2.5%-3.6%

AT HOME

After falling about three fourth of a percent in the initial trade, benchmark indices saw a sustained northward move through the session to end with gains of about nine tenth of a percent. Sensex settled at 26867, up 241 points while Nifty added 68 points to finish at 8238. BSE mid-cap and small-cap gained 0.4% each. Except a 0.1% cut in BSE FMCG index, all the sectoral indices ended higher with IT and Teck indices leading the tally, up 2% each.

FIIs net sold stocks and index futures worth Rs 537 cr and 1336 cr respectively but net bought stock futures worth Rs 290 cr. DIIs were net buyers to the tune of Rs 724 cr.

Rupee depreciated 23 paise to end at 67.31/$.

Government yesterday announced relaxed foreign direct investment (FDI) norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products.

It has allowed up to 100% FDI in defense through the approval route, 100% FDI in food product e-commerce, 100% FDI in greenfield pharma via the automatic route, 100% in brownfield pharma - of which 74% will be through automatic route - 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route.

While FDI in defence beyond 49% was already allowed through approval route and up to 49% through automatic route, the new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

The government has also decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking single brand retail trading of products having ‘state-of-art’ and ‘cutting edge’ technology, which will likely make it easier for companies like Apple to set up manufacturing units in India.

OUTLOOK

Today morning Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had reiterated the view that 8064, from where Nifty has shown repeated bounce, continues to be important immediate support while 8213, the top made last Wednesday, continues to be immediate hurdle above which 8295, the top made in early June, would be the bigger hurdle to eye.

The benchmark, after touching a low of 8107 in the initial trade, rebounded smartly to end at 8238, crossing the 8213 hurdle and moving towards 8295 resistance.

8295 continues to be next target to eye. Immediate support on the hourly chart is placed around 8150, which should serve as the stop loss for trading longs.

Fed Chair Janet Yellen is scheduled to testify today in front of Congress on a number of matters, including monetary policy.