NIFTY AGAIN RESISTED NEAR 8595 MARK; 8475 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY AGAIN RESISTED NEAR 8595 MARK; 8475 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices fell 0.3%-0.4% with the Dow snapping 9-day winning streak, reacting to fall in oil and consolidating gains ahead of next week's Fed meeting.

US oil fell 2.2% to $44.75 a barrel. Brent fell 2.1% to $46.20.

Earnings were mixed. Southwest Airlines, Sherwin-Williams, and Intel were among the notable disappointments while GM and Ebay topped estimates.

Initial jobless claims fell by 1000 to 253000, lower than the expectation of 265000 figure.

European markets ended mixed with modest changes. European Central Bank left key interest rates unchanged as expected. ECB President Mario Draghi, at a press conference, said that the central bank was ready to act if necessary but officials wanted to "reassess the underlying macroeconomic conditions" and data before making a decision.

Dollar index eased to 96.96 from 97.14. Gold rose 0.9% to $1331.

AT HOME

The day belonged to bears as benchmark indices, after trading in a narrow range in the morning, slipped in the noon session to end lower by about seven tenth of a percent. Sensex lost 205 points to settle at 27711 while Nifty finished at 8510, down 56 points. BSE mid-cap and small-cap indices lost 0.2% and 0.1% respectively. BSE Power index fell 2.1%, becoming top loser among sectoral indices, followed by 1.7% cut in Utilities index and Bankex. Telecom and FMCG indices gained 0.2% each.

FIIs net bought stocks and index futures worth Rs 420 cr and 332 cr respectively but net sold stock futures worth Rs 46 cr. DIIs were net sellers to the tune of Rs 372 cr.

Rupee appreciated 2 paise to end at 67.17/$.

HDFC Bank reported in-line with estimated 20.14% rise in net profit at Rs 3239 cr for the April-June quarter. NII grew 21.8% to Rs 7781 cr. Provisions for bad loans rose 19% y-o-y and 31% q-o-q to Rs 867 cr. Asset quality slightly weakened with gross NPAs rising 10 bps q-o-q to 1.04% and net NPA by 4 bps to 0.32%.

ITC reported profit growth of 10.1% at Rs 2385 cr. Revenue rose 8.3% to Rs 13253 cr. Operating profit grew 8.4% to Rs 3526 cr and margin remained unchanged at 26.6%. Cigarette volumes grew at 3%.

Kotak Mahindra was a slight miss on earnings and asset quality also weakened. Standalone net profit rose 291% to Rs 742 cr y-o-y. NII grew 20.1% to Rs 1919 cr. Provisions for bad loans jumped 41.2% y-o-y and 10.4% q-o-q to Rs 179.5 cr. Gross NPA rose 14 bps to 2.5% and net NPA 15 bps to 1.21%.

OUTLOOK

Today morning Nikkei is down nearly a percent and the yen is trading stronger against the dollar after Bank of Japan governor, in a BBC interview broadcast yesterday, ruled out the possibility of "helicopter money" - the colloquial name for "money-financed fiscal programs" - to tackle deflation in Japan, amid building expectations that policymakers were gearing up to introduce more stimulus.

Other Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that in the latest weekly and subsequent daily reports we had mentioned that after a steep run-up, Nifty had formed a negative divergence on the hourly chart and a consolidation/correction in the short term cannot be ruled out.

The benchmark has traded in a narrow range this week and yesterday, after touching a high of 8585, slipped to end at 8510, vindicating above view.

As we have been mentioning, 8595, the top made last week, continues to be the immediate hurdle to eye, a crossover of which is required for fresh upmove. On the way down 8475 continues to be immediate support, a breach of which can take Nifty to 8400.

Axis Bank will report its quarterly earnings today.