8545 CONTINUES TO BE IMMEDIATE SUPPORT; FED IN FOCUS

8545 CONTINUES TO BE IMMEDIATE SUPPORT; FED IN FOCUS

WORLD MARKETS                             

Dow ended marginally in the red, while S & P 500 and Nasdaq gained 0.03% and 0.24% yesterday amid major corporate earnings and ahead of the Fed decision.

McDonald's plunged 4.5% for its worst day since July 2009 after same-store sales growth disappointed. 3M fell 1.1% after it lowered its guidance for 2016 sales growth. Verizon fell 1.9% as earnings topped expectations but revenue was a miss. On the flip side, Caterpillar, DuPont and United Technologies climbed after reporting earnings that beat on both the top and bottom line.

In economic news, the flash Markit services PMI edged down to 50.9 in July from 51.4 in June. New U.S. single-family home sales rose 3.5% in June to 592,000 units last month, topping expectations and the highest level since February 2008. The Conference Board's consumer confidence index was 97.3 in July, a touch below June's 97.4 print.

WTI crude fell 21 cents or half a percent to $42.92 a barrel. Dollar index was mildly lower.

European markets, except a 0.2% lower Spain, gained upto half a percent with DAX leading the tally.

AT HOME

After trading in a narrow range for better part of the day, benchmark indices saw a sudden sell-off in last hour to end with cuts of nearly half a percent. Sensex settled at 27977, down 119 points while Nifty lost 45 points to finish at 8591. BSE mid-cap index managed to gain 0.2% but the small-cap index tumbled 0.7%. Except a 0.4% higher IT index and 0.1% gain in Power and Utilities indices, all the BSE sectoral indices ended in red with Realty index leading the tally, down 1.3%, followed by 1.1% cut in Healthcare and Auto indices.

FIIs net bought stocks and index futures worth Rs 670 cr and 394 cr respectively but net sold stock futures worth Rs 494 cr. DIIs were net sellers to the tune of Rs 418 cr.

Rupee appreciated 8 paise to end at 67.27/$.

Maruti reported better-than-expected 23% growth in net profit at Rs 1486 cr, driven majorly by other income. Revenue growth was lower-than-expected, rising 11.6% to Rs 14927 cr. Operational performance met estimates. Operating profit grew 2.25% to Rs 2216 cr and margin contracted by 140 bps to 14.8%. Realization rose 9% y-o-y to Rs 4.28 lac/unit.

Dr Reddy's Lab missed expectations on all counts with consolidated net profit falling by 76.3% y-o-y to Rs 153.5 cr. Revenue fell 14% to Rs 3222 cr. Operating profit slipped 60% to Rs 398 cr and margin contracted by 1390 bps to 12.6%.

ACC reported 3.3% dip in revenue at Rs 2917 cr but net profit soared 81% to Rs 238 cr as EBIDTA rose 37% to Rs 457 cr and operating margin improved to 15.7% from 11.1%. EBIDTA/ton stood at Rs. 670 and was better-than-expected.

Ambuja Cement reported 77% rise in standalone net profit at Rs 400 cr. Income rose 2% to Rs 2561 cr. EBIDTA grew 58% to Rs 582 cr and operating margin shot up to 20% from 15%.

Zee reported 22% growth in consolidated net profit at Rs 217 cr. Income rose 18.5% to Rs 1572 cr. Advertising revenue rose 19.2% to Rs 912 cr.

OUTLOOK

Today morning, Nikkei is up more than a percent, other Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a marginally higher start for our market.

After Nifty crossed the 8595 hurdle on Monday, we had advised holding on to trading longs with the stop loss of 8545 for the immediate target of 8700-8715 followed by next one at 8845.

The benchmark, after touching a high of 8645 in the initial trade, plunged sharply in last hour to end at 8591.

8545 continues to be immediate support to eye a sustained trading below which will generate a sell on the hourly chart. And therefore, 8545 continues to be stop loss for trading longs.

Asian Paints, Bajaj Auto, Bharti Airtel, HDFC, JSW Steel and Yes Bank will report their quarterly earnings today.

The Federal Open Market Committee is scheduled to conclude its two-day meeting today. Markets do not expect the Fed to raise interest rates, but will watch for indications on the timing of the next hike.