“REXIT” SURPRISE BEFORE THE “BREXIT” VOTE
Dow and S & P 500 fell 0.3% while Nasdaq lost 0.9% on Friday amid continued uncertainty ahead of next week's scheduled Brexit vote.
Healthcare and Tech stocks fell the most while Energy was the top performer as US oil snapped a six day losing streak, settling up $1.77 or 3.8% at $47.98 a barrel.
Apple tumbled 2.3% after news intellectual property regulators in Beijing barred the company from selling models of the iPhone 6 and 6 Plus in the city, citing strong similarity to an existing Chinese phone.
In a significant shift in views, St. Louis Fed President James Bullard said low growth and a very low fed funds rate of just 63 basis points will likely remain in place through 2018, implying just one more hike until that time.
Housing starts declined 0.3% in May, while building permits rose 0.7%.
Key European markets gained 0.8%-1.2% while Italy soared 3.5% and Spain gained 2% on the back of a rally in banking stocks and a tick-up in oil prices.
Dollar index fell 0.4%. Gold fell $4 to $1295 an ounce, its first negative day in eight.
For the week, US indices fell 1.1%-1.9%. Key European markets were down 1.6%-2.6%. In Asia, Nikkei, in its worst weekly fall since the one ended February 12, nosedived 6%, Hang Seng was down 4.2% while Shanghai lost 1.4%. US oil fell 2.2%. Gold gained 1.5%.
On the Brexit front, Saturday, a fresh poll showed support for the remain camp had taken a narrow 44% against 43% lead over the leave campaign, based on interviews conducted on Thursday and Friday.
After gaining about two third of a percent in the initial trade, benchmark indices gave about half of them through the session to end higher by nearly four tenth of a percent. Sensex added 100 points to settle at 26626 while Nifty finished at 8170, up 29 points. BSE mid-cap index ended marginally in the red while small-cap index gained 0.3%. BSE Realty index soared 3.5%, becoming top gainer among the sectoral indices, followed by 1.1% rise in Telecom index. Healthcare and Capital Goods indices lost 0.8% and 0.4% respectively.
FIIs net bought stocks worth Rs 32 cr but net sold index futures and stock futures worth Rs 480 cr and 91 cr respectively. DIIs were net sellers to the tune of Rs 26 cr.
Rupee appreciated 13 paise to end at 67.08/$.
In a surprise development, RBI governor Rajan, in a letter written to RBI staff, announced that he will return to academia when his term ends on September 4, 2016.
Today morning, except a marginally lower Shanghai, other Asian markets are up between 1%-2% with Nikkei on the top but SGX Nifty, reacting to REXIT (Rajan Exit), is suggesting about 50 points lower start for market.
As mentioned in Friday's report, 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 8294, the top made in early June, would be the bigger hurdle to eye. Also, we have been advising keeping volumes low on account of looming Brexit vote scheduled for this Thursday.
That continues to be the view.