NIFTY RETREATS FROM THE VICINITY OF 10735 HURDLE; 10565 IS THE IMMEDIATE SUPPORT

NIFTY RETREATS FROM THE VICINITY OF 10735 HURDLE; 10565 IS THE IMMEDIATE SUPPORT

WORLD MARKETS

US indices plunged 0.5%-1.6%, extending the fall to third straight day, amid political turmoil in Italy and Spain and ongoing difficult trade talks with China.

The White House said in a statement that the United States will release a list of some $50 billion worth of Chinese goods that will be subject to a 25% tariff. The United States will also continue to pursue litigation against China at the WTO.

In the Europe, Italy has been struggling to form a stable government since inconclusive elections in March, with anti-establishment forces abandoning their effort to form a ruling coalition over the weekend. These developments have reignited dormant fears concerning the stability of the eurozone and default risk concerning Italy's €2.3 trillion ($2.68 trillion) in debt. Spain added fuel to fire as country's parliament is set to vote whether to oust Prime Minister Mariano Rajoy and his center-right party this Friday.

The 10-year Italian bond yield jumped above 3.38%, its highest level since March 2014 and more than 2.5% points above the German 10-year bond rate. US bonds rose on safe haven buying with the yield on the 10-year note falling to 2.77%, down from highs above 3.1% in recent weeks. The euro fell below $1.16 — its lowest level this year against the greenback. The Dollar Index rose 0.7% to 94.83.

WTI crude fell $1.15 or 1.7% to $66.73 a barrel.

European markets fell 1.3%-2.6%.

AT HOME

Sensex and Nifty fell 0.6% and 0.5% respectively to break three-day winning streak. Sensex lost 216 points to settle at 34949 while Nifty finished at 10633, down 55 points. BSE mid-cap and small-cap indices fell 0.4% and 0.3% respectively. BSE Bankex and Finance indices tumbled 1.6% and 1.1% respectively, becoming top losers among the sectoral indices while Oil & Gas and Auto indices were the top gainers, up 0.5% and 0.4% respectively.

FIIs net sold stocks and index futures worth Rs 407 cr and 336 cr respectively but net bought stock futures worth Rs 407 cr. DIIs were net buyers to the tune of Rs 578 cr.

Rupee closed at 67.86/$, depreciating 43 paise compared to previous close.

BPCL was an all round beat. Net profit was up 25% at Rs 2673 cr and revenue was up 7.6% at Rs 65240 cr. EBIDTA was up 17% at Rs 3722 cr and margin rose 50 bps to 5.7%. Gross refining margin stood at $6.5% and core GRM stood at $5.57.

M & M was an all round beat. Net profit surged 50% y-o-y to Rs 1155 cr while revenue were up 25.6% at Rs 13189 cr. EBIDTA soared 70% to Rs 1995 cr and margin improved 400 bps to 15.1%.

Coal India reported a fall of 52% in net profit at Rs 1295 cr. Revenue fell 16% to Rs 26909 cr. EBITDA plunged 94.4% to Rs 195.5 cr and operating margin contracted 1420 bps to 0.7%.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.8%-1.6% and SGX Nifty is suggesting about 60 points lower start for our market. In yesterday's report we had reiterated the view that 10735, the 61.8% retracement level of the recent 10930-10420 fall, is the immediate hurdle, a crossover of which is required for a fresh upmove.

Yesterday, Nifty, after touching a high of 10717, reversed to end at 10633 and is set to open below 10600 today.

Immediate support on the hourly chart is placed at 10565, a breach of which will generate a "Sell" on the hourly chart and pave the way for further correction. 10420, the low made last week, would be the next major support if that happens.

ONGC will report its quarterly earnings today.