NIFTY RETREATS AFTER ACHIEVING 10870 TARGET; TRAIL STOP-LOSS TO 10775

NIFTY RETREATS AFTER ACHIEVING 10870 TARGET; TRAIL STOP-LOSS TO 10775

WORLD MARKETS

US indices fell 0.1%-0.5% after digesting Fed decision and comments.

The Federal Reserve hiked interest rates 25 basis points as widely expected, but suggested two more increases are likely this year. The Fed changed several phrases from its prior memos, citing more optimistic economic growth and higher inflation expectations. According to the Fed's dot plot, which tracks participant expectations for interest rates, members now expect four hikes this year, up from the three previously expected.

U.S. Treasury yields rose with the yield on the benchmark 10-year note crossing the 3%, before retreating back to 2.977%. The two-year Treasury note yield hit its highest level since 2008. The dollar index initially rose above 94 before backing off to 93.57.

WTI crude rose 28 cents to $66.64 after U.S. commercial crude inventories fell by 4.1 million barrels in the week to June 8.

In Europe, FTSE and CAC were flat while DAX and Italy gained 0.4% each.

AT HOME

After gaining about half a percent, benchmark indicess slipped in late noon trade to end higher by just 0.1%. Sensex settled at 35739, up 46 points while Nifty added 14 points to finish at 10856. BSE mid-cap and small-cap indices fell 0.5% and 0.2% respectively. BSE IT and Teck indices climbed 1.3% and 0.9% respectively, becoming top gainers among the sectoral indices while Telecom index was the top loser, down 1.3%, followed by 0.7% lower Capital Goods index.

FIIs net sold stocks and index futures worth Rs 71 cr and 297 cr respectively but net bought stock futures worth Rs 88 cr. DIIs were net buyers to the tune of Rs 487 cr.

Rupee depreciated 16 paise to end at 67.64/$.

The Union Cabinet yesterday approved foreign direct investment (FDI) worth Rs 24,000 crore for HDFC Bank.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.2%-0.4% and SGX Nifty is suggesting about 30 points lower start for our market.

At the risk of repeating, we had been working with target of 10870, where a trendline adjoining tops made in January and May is placed, after 10770 hurdle was taken out.

Nifty yesterday touched a high of 10893 before closing at 10856, achieving this target and vindicating our view.

After a good run up since late May, Nifty is now close to 10930 mark, which was the top made in May and is also the immediate previous top on the weekly chart and hence an important resistance to eye. Upon crossover of 10930, 11171, the top made in January, would be the next target to eye.

10775 is the immediate support on the hourly chart, with the stop-loss of which, trading longs should be held on to.