PRUDENT MORNING MANTRA - 31.07.2014

NIFTY SNAPS TWO-DAY LOSING STREAK; KEY EARNINGS IN FOCUS

WORLD MARKETS

US indices ended mixed yesterday after second quarter GDP data came in better-than-expected and the Fed continued tapering asset purchases. Nasdaq gained 0.5%, S & P 500 ended absolutely flat while Dow lost 0.2%.

Federal Reserve, as expected, cut another $10 bn from its monthly bond buys and left its short-term interest rate target near zero. Fed Bank of Philadelphia President Charles Plosser was the sole dissenter, objecting to the "considerable time" phrasing as related to the window of how long the central bank would wait until it begins raising the Fed funds rate.

Earlier, the Commerce Department reported the economy grew 4% in the second quarter, with the faster-than-estimated pace fueling speculation that the Fed could move on rates more quickly than anticipated. Separately, ADP reported the private sector added 218,000 jobs in July.

Treasuries plunged, with the benchmark 10-year yield surging 10 basis points to 2.556%. Gold fell $3.4 to $1295 an ounce and Nymex crude shed 70 cents to $100.3 a barrel.

European markets, except a 0.3% rise in Spain, fell between 0.5%-1.2%, reacting to fresh sanctions against Russia and corporate earnings. Spain's economy grew by 0.6% in the last quarter, marking the fastest pace in over six years and beating expectations.

                                                             

AT HOME

After trading with a negative bias for better part of the day, benchmark indices spiked up in the late noon trade to end with gains in the vicinity of half a percent, snapping a two-day losing streak. Sensex climbed  96 points to settle at 26087 while Nifty finished at 7791, up 43 points. BSE mid-cap index gained 0.4% but the small-cap index ended a tad lower. Except a 4.7% and 0.2% cut in BSE Capital Goods and IT indices, all other sectoral indices ended in green with Bankex and Consumer Durable indices leading the tally, putting on 1.6% and 1.5% respectively.

FIIs net sold stocks and stock futures worth Rs 382 cr and 373 cr respectively but net bought index futures worth Rs 639 cr. DIIs were net buyers to the tune of Rs 516 cr.

Rupee appreciated 6 paise to close at 60.06/$.

L & T plunged after the quarterly earnings revealed that the company's Hydrocarbons business (such as pipelines for oil and gas companies in India and abroad), which is among the fastest growing and most promising segments, halved in revenues and turned loss-making at the pre-tax levels over the year ago.

Lupin reported better-than-expected 56% y-o-y growth in June quarter net profit at Rs 625 cr. Revenues rose 34.9% to Rs  3340 cr. EBIDTA margins soared to 33.9% from 24.4% y-o-y.

Dr Reddy met street expectations with the consolidated net profit rising 52.4% y-o-y to Rs 550 cr. Revenue grew 23.6% to Rs 3517 cr. Operating margin expanded by 500 bps to 25%.

OUTLOOK

Today morning, Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a flattish start for our market.

Yesterday, after touching a low of 7707, Nifty rebounded sharply to close at 7791. Ever since Nifty achieved 7809 target, we have been advising keeping trading volumes low and remaining on sidelines while Nifty consolidates.

That continues to be the view. 7840, the all-time high made last Friday is the immediate resistance above which 7900, where the trendline adjoining two recent tops on the daily chart is placed, would be the next target. 34 DMA has moved up to 7630 and that would be the important support to watch on the day down if 7707, the low made yesterday, breaks.

HCL Tech, ICICI Bank, Maruti and Tech Mahindra will report their quarterly earnings today.

PRUDENT MORNING MANTRA - 30.07.2014

NIFTY EXTENDS CONSOLIDATION

WORLD MARKETS

Dow and S & P 500 fell four tenth of a percent and Nasdaq ended marginally lower yesterday as geopolitical concerns overshadowed largely better-than-expected corporate results.

President Obama, in a statement said the US was expanding on measures announced two weeks ago, targeting Russian energy, defense and financial sectors as Russia has continued to support separatists in the Ukraine, and was still building up forces on its own border with Ukraine. Obama's statement followed European Union governments that announced sanctions earlier in the day to reduce Russia's ability to tap into bank financing and advanced technology.

Conference Board's measure of consumer confidence came in at 90.9 in July, the highest reading since October 2007. S & P/Case-Shiller home price index showed that home prices climbed more than expected in May, although the pace of monthly increases showed signs of slowing.

European markets gained between 0.3%-0.7%

Nymex crude fell 0.7% to $101 a barrel while gold dropped 0.4% to $1298 an ounce.

                                                             

AT HOME

On Monday, benchmark indices saw a sustained downward move after a flattish start to end lower by half a percent, extending the losing streak to second day. Sensex lost 135 points to settle at 25991 while Nifty finished at 7748, down 42 points. BSE mid-cap and small-cap indices lost 0.5% and 0.7% respectively. Realty index tumbled 2.7%, becoming top loser among the sectoral indices, followed by 1.5% cut in Metal index. Consumer Durable and FMCG indices gained 0.6% and 0.4% respectively.

FIIs net bought stocks and index futures worth Rs 75 cr and 32 cr respectively but net sold stock futures worth Rs 58 cr. DIIs were net buyers to the tune of Rs 56 cr.

Rupee depreciated 2 paise to close at 60.12/$.

L & T's consolidated net profit soared 111% to Rs 967 driven primarily by gain made on sale of assets. Consolidated sales rose 10% to Rs 18975 cr. Standalone performance however was moderate, reflecting the sluggish pace of growth in the infrastructure sector.

ITC reported 15.6% y-o-y growth in June quarter net profit at Rs 2186 cr which was lower than expectations but revenue growth in cigarette, agri and paper business was strong. Net sales rose 24.9% to Rs 9164 cr. Operating margins dropped 230 bps to 34.8%.

Bharti Airtel reported lower than estimated 15.3% q-o-q growth in consolidated net profit at Rs 1108.5 cr but rest of the numbers were strong supported by Indian operations. Consolidated revenues rose 3.35% to Rs 22962 cr. Margin expanded by 72 bps to 33.6%.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 10 points higher opening for our market.

In Monday's report we had mentioned that 7740 is the immediate support on the hourly chart which should serve as the stop loss for trading longs. The benchmark, after touching a low of 7722, recovered to close at 7748.

We had earlier advised booking part profit at 7808 in trading longs initiated at 7600 and staying light as Nifty continues to consolidate in broad 400 point range.

A breach of 7722, which is also last week's low, can take Nifty further lower to around 7625, where the 34 DMA is placed. On the way up, 7800 is the immediate resistance on the hourly chart.

In the US, Fed's regular monetary policy announcement is due on today, with the central bank expected to cut monthly asset purchases by another $10 billion to $25 billion. U.S. second-quarter GDP figures will also be announced today and is expected to show a growth of 3%.

PRUDENT MORNING MANTRA - 28.07.2014

ASIA OPENS HIGHER ON CHINESE DATA; 7740 IS THE IMMEDIATE SUPPORT FOR NIFTY

WORLD MARKETS                             

US indices fell between 0.5%-0.7% on Friday weighed by disappointing earnings in addition to ongoing worries over geopolitical unrest.

Visa fell more than 4% on its lowered full-year revenue forecast. Amazon shares dropped as much as 11% on weak earnings.

Durable goods rose more than expected in June, pointing to momentum in the economy.

U.S. intelligence indicated that Russia could provide heavier and more sophisticated weaponry to Ukrainian separatists at any moment, a Pentagon spokesman said on Friday. In the Middle East, authorities in Gaza reported that 15 people were killed on Thursday after Israeli forces shelled a shelter at a United Nations run school, bringing the civilian death toll above 800.

European markets, except a modestly higher Spain, fell between 0.4%-1.8% as concerns about the impact of tougher sanctions against Russia weighed amid ongoing unrest in Ukraine.

Media reports suggested that the European Union had reached a preliminary agreement on tougher economic sanctions against Russia after the downing of a Malaysian jetliner in eastern Ukraine last week.

Also, widely watched figures from the Ifo Institute showed German business-climate survey fell to 108.0 in July, marking a third straight monthly decline and missing expectations for 109.4. On the other hand UK second-quarter GDP came in at 0.8% on the quarter, which met economists' expectations.

The Euro hit its lowest level against the dollar since November.

AT HOME

Benchmark indices tumbled half a percent in today's trade, breaking the eight day winning streak. Sensex lost 145 point to settle at 26126 while Nifty finished at 7790, down 40 points. BSE mid-cap and small-cap indices plunged 1.2% and 1.9% respectively. Barring a 1.9% and 0.7% rise in BSE Healthcare and FMCG indices respectively, all other sectoral indices ended in red with Realty and Metal indices leading the tally, giving away 2.7% and 2.3% respectively.

FIIs net bought Stocks and stock futures worth Rs 126 cr and 180 cr respectively but net sold index futures worth Rs 81 cr. DIIs were net sellers to the tune of Rs 210 cr.

Rupee appreciated 2 paise to close at 60.10/$.

For the week, Sensex and Nifty gained 1.9% and 1.6% respectively.

OUTLOOK

Data over the weekend showed China's industrial profits surged 18% in June. The gain outpaced an 8.9% increase in May.

In Gaza, fighting subsided on Sunday after Hamas Islamist militants said they backed a 24-hour humanitarian truce in light of the Muslim holiday Eid al-Fitr.

Europe implemented new sanctions against Russia, including adding more names of Russian individuals to target and blocking Russian banks from accessing capital markets.

Today morning Asian markets are higher about half a percent and SGX Nifty is suggesting a flattish start for our market.

The upward sloping trendline adjoining two recent tops on the daily chart currently presents resistance around 7900 and that is the immediate target on the way up.

On the downside, immediate support on the hourly chart has moved up to 7740, which should serve as the stop loss for trading longs.

LT and HUL will report their quarterly earnings today.

PRUDENT MORNING MANTRA - 25.07.2014

NIFTY AT RECORD HIGH; TRAIL STOP LOSS TO 7730

WORLD MARKETS

US indices ended little changed yesterday with the S&P 500 hitting another record, as investors considered another batch of corporate earnings and mixed economic reports.

New homes fell 8.1% percent in June to 406000, the estimated figure being 480000. Weekly jobless claims came in at 284000, less than the 308000 estimated. The four-week average went down by 7000 to 302000.

Facebook and Ford shares rose in reaction to their quarterly earnings while Caterpillar and General Motors fell.

The International Monetary Fund trimmed its global growth forecasts again, down to 3.4% this year from April's forecast for 3.7%.

European markets surged between 0.3%-2% after a business activity index showed the euro zone rebounded in July.

The flash composite PMI for the euro zone came in at 54.0, up from 52.8 in June, marking a three-month high and surpassing expectations.U.K. retail sales came in at their strongest level in ten years in the second quarter, but the figure for June was below market expectations.

Events in Ukraine and Gaza continued to be in focus. Ukrainian Prime Minister announced his resignation following turmoil in government. Meanwhile, a Ukrainian rebel commander told Reuters that pro-Russian rebels possessed BUK missiles, the type that was believed to have shot down Malaysia Airlines flight MH17.

In the Middle East, the U.S. Federal Aviation Authority lifted its ban on airlines flying to Tel Aviv, but warned that it would continue to monitor the airport following reports of rocket fire earlier this week. The United Nations Human Rights Council said Israel may have committed war crimes in its killing of hundreds of civilians during the near three-week offensive on Gaza.

Gold fell 1.1% to $1291 an ounce and Nymex crude too eased 1.1% to $101.94/bbl.

                                                             

AT HOME

Benchmark indices climbed nearly half a percent, extending rising streak to eight straight session and closing at fresh all-time high. Sensex gained 125 points to settle at 26272 while Nifty finished at 7831, up 35 points. Broader market however continued to under perform, with BSE mid-cap index losing 0.2% while the small-cap index gained 0.2%. BSE Metal and IT indices gained 1.5% and 0.9% respectively, becoming top gainers among the sectoral indices while Consumer Durable and Power indices lost 0.9% and 0.3% respectively.

Cairn India plunged on the back of revelation that the company has extended a loan of $1.25 billion (around Rs 7,500 crore) to its parent Vedanta for a two-year period as a part of the former's treasury operations, raising corporate governance concerns.

FIIs net bought stocks and stock futures worth Rs 282 cr and 180 cr respectively but net sold index futures worth Rs 81 cr. DIIs were net sellers to the tune of Rs 290 cr.

Rupee depreciated 3 paise to close at 60.12/$.

Union Cabinet yesterday approved raising FDI in insurance sector up to 49%. The bill will now be introduced in the current session of Parliament.

Wipro reported 1.2% q-o-q dollar revenue growth at USD 1740 mn for the June quarter, which was marginally below the estimate. Operating margins were down to 22.8% from 24.5% but were better than estimates. For the September quarter the company has guided for IT services revenues in the USD 1770-1810 million range, up 1.72-4% q-o-q.

Ambuja Cement reported 26.2% rise in June parter net profit at Rs 409 cr on higher sales which were up 15.4% at Rs 2706 cr. Operating margin was flat y-o-y at 21.2%.

ACC missed market expectations with the quarterly net profit falling 7% at Rs 241 cr on account of higher expenses. Revenue grew 7.5% to Rs 3059 cr. Operating margin dipped by 250 bps to 14.7%.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting a flattish start for our market.

Nifty gained 35 point yesterday to end at 7831, extending the rising streak to eight session and closing at fresh all time high. Next target on the way up is about 7880 where the upward sloping trendline adjoining recent tops on the daily chart is placed.

Immediate support on the hourly chart has moved up to 7730, with the stop loss of which trading longs can be held on to.

PNB will report its quarterly earnings today.

PRUDENT MORNING MANTRA - 24.07.2014

BANG ON TARGET

WORLD MARKETS

While Dow ended modestly lower, S & P 500 and Nasdaq gained 0.2% and 0.4% respectively with the S&P 500 finishing at a record for the 26th time this year, as investors weighed corporate earnings and kept an eye on ongoing turmoil in Gaza and Ukraine.

Apple and Microsoft shares rose after reporting better-than-expected revenue. Boeing hiked its full-year forecast. PepsiCo reported revenue that topped expectations.

Applications for mortgage refinancing jumed 4%, the Mortgage Bankers Association said. However, the report showed that home purchase loan applications were down 15% from a year ago.

Yesterday, pro-Russian rebels shot down two Ukrainian fighter jets, not far from where the Malaysia Airlines jet was brought down last week.

U.S. Secretary of State John Kerry flew to Tel Aviv yesterday to press for a truce in the fighting between Israel and militants in Gaza that has killed more than 600 people. U.S. and European airlines have temporarily halted flights to Tel Aviv, following a rocket attack near the airport.

European markets, except a 0.2% cut in Italy, ended marginally higher. the Bank of England released the minutes from its latest monetary policy meeting. These showed that members voted unanimously to keep interest rates at record lows.

Nymex crude rose 73 cents to $103.12.

                                                             

AT HOME

Benchmark indices ended higher by four tenth of a percent after a rangebound but choppy trading session, marking an all-time closing high. Sensex gained 121 points to settle at 26147 while Nifty finished at 7796, up 28 points. Broader market however underperformed yet again with the mid-cap index ending flat and the small-cap index losing 0.6%. BSE IT and Teck indices climbed 2.2% and 1.7% respectively, becoming top gainers among the sectoral indices while Metal and Healthcare indices lost 0.4% and 0.2% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 652 cr, 52 cr and 625 cr respectively. DIIs were net sellers to the tune of Rs 292 cr.

Rupee appreciated 15 paise to close at 90.09/$.

Cairn India reported a massive 65% y-o-y and 64% q-o-q fall in consolidated net profit at Rs 1093 cr due to change in method of depreciation and weak operational performance. Total income from operations grew 10.3% y-o-y (down 11.2% q-o-q) to Rs 4,483 crore which was slightly better than expectations of Rs 4,600 crore on account of higher volumes and realisations. Operating margin dropped 490 bps sequentially  to 68.1%.

OUTLOOK

A preliminary reading of China's HSBC July manufacturing PMI has come in at 52.0, up from 50.7 in June and marking an 18-month high.

Asian markets are trading with modest gains but SGX Nifty is suggesting about 20 points lower opening for our market.

Nifty, after touching a high of 7809, closed at 7796 yesterday, achieving the 7808 target we have been working ever since 7600 hurdle was taken out.

Now a close above 7808 required for the further upmove. Therefore we had advised booking some profit in trading longs around 7808 and trailing stop loss in the remaining position. That continues to be the view.

Immediate support on the hourly chart has moved up to 7670 which should now serve as the stop loss for trading longs.

Wipro, ACC and Ambuja Cement will report their quarterly earnings today.

PRUDENT MORNING MANTRA - 23.07.2014

NIFTY SET TO ACHIEVE 7808 TARGET

WORLD MARKETS

US indices gained between 0.4%-0.7% yesterday, lifting the S&P 500 to a record, on the back of some steady economic data and corporate earnings.

Existing home sales hit an eight-month high in June while the consumer price index rose 0.3% in the month after a 0.4% rise in May.

After Tuesday's close, Apple reported quarterly earnings of $1.28 a share on revenue of $37.4 billion, versus expectations of EPS of $1.23 on roughly $37.98 billion in sales. Shares declined in after-hours trading. Microsoft rose in after-hours trading after the software giant posted earnings that fell short of Wall Street's expectations and revenue that surpassed estimates.

European markets jumped between 1%-2.2% with concern over events in Ukraine waning. A meeting of European Union foreign ministers reacted to calls for further action against Russia by issuing a statement saying it remained "ready to introduce without delay a package of further significant restrictive measures."

Meanwhile, Russia's envoy to Malaysia said in a news conference that the rebels did not have Buk missile systems and called for an investigation to be conducted by the international community.

Gold dipped $7.6 to $1306 an ounce and Nymex crude shed 17 cents to $104.4 a barrel.

                                                             

AT HOME

Benchmark indices surged more than a percent yesterday to close at the second highest level ever. Sensex soared 311 points to settle at 26025 while Nifty finished at 7768, up 84 points. BSE mid-cap index however gained just 0.1% and the small-cap index a tad lower. Except a 0.7% and 0.3% cut in BSE Capital Goods and Power indices, all other sectoral indices ended in green with Teck and IT indices leading the tally, climbing 2% and 1.8% respectively. 

FIIs net bought stocks, index futures and stock futures worth Rs 412 cr, 1201 cr and 725 cr respectively. DIIs were net buyers to the tune of Rs 59 cr.

Rupee appreciated 12 paise to close at 60.18/$.

Asian Paints reported better than expected 23.2% rise in consolidated quarterly net profit at Rs 338.7 cr and total income rose 19.3% to Rs 3362 cr. Operating margin expanded by 120 bps to 16.9%.

Axis Bank reported lower-than-expected 18.3% growth in June quarter net profit at Rs 1667 cr due to lower other income and higher operating expenses despite significant fall in provisions. NII grew 15.5% to Rs 3310 cr, the expected figure being 3276 cr. Gross NPA rose 12 bps sequentially to 1.34% and Net NPAs rose 4 bps to 0.44%.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 30 points higher opening for our market.

Yesterday, after achieving our initial target of 7730, Nifty moved further higher towards 7808, the ultimate target we had indicated when 7600 hurdle was crossed.

Traders are advised to book some profit in the vicinity of 7808 and trail stop loss in remaining positions to 7660, which is the immediate support on the hourly chart.

Cairn will report its quarterly earnings today.

PRUDENT MORNING MANTRA - 22.07.2014

NIFTY NEARLY ACHIEVES 7730 TARGET; TRAIL STOP LOSS TO 7570

WORLD MARKETS

US indices, after falling nearly three fourth of a percent in the initial trade due to the ongoing turmoil in Gaza and Ukraine, recovered through the session to end with cuts in the vicinity of a fourth of a percent.

U.S. President Barack Obama reiterated demands for Russian President Vladimir Putin to authorize full access to the crash site or face further sanctions, as "compelling" evidence builds that pro-Russian separatists supplied by Moscow shot down the plane by mistake.

Meanwhile, U.K. Prime Minister David Cameron called on the European Union to toughen sanctions against Moscow should it be proven that separatists were responsible.

In the Gaza Strip, the Palestinian death toll reportedly climbed above 500 and seven Israeli soldiers died on Monday, following the deaths of 13 soldiers on Sunday, with the fighting continuing despite appeals for a ceasefire.

Erupean markets lost anywhere between 0.4%-1.5%. Nymex crude gained 1.5% to $104.6 a barrel and gold rose 0.5% to $1314 an ounce.

AT HOME

After gaining nearly three fourth of a percent in the initial trade, benchmark indices saw a gradual downward move through the session to end higher by just a fourth of a percent. Sensex gained 74 points to settle at 25715 while Nifty finished at 7684, up 20 points. BSE mid-cap and small-cap indices gained 0.5% and 0.9% respectively. BSE FMCG and Oil & Gas indices gained the most among the sectoral indices, rising 1% and 0.6% respectively while Realty and Capital Goods indices lost 1% and 0.8% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 161 cr, 295 cr and 410 cr respectively. DIIs were net sellers to the tune of Rs 181 cr.

Rupee depreciated 2 paise to close at 60.30/$.

HDFC Bank reported, lower than expected 21.1% y-o-y growth in June quarter net profit at Rs 2233 cr due to higher provisioning and lower other income. NII at Rs 5171 cr, grew 17%, which was slightly better-than-estimates.

HDFC on the other hand reported better-than-estimated 14.7% rise in net profit at Rs 1345 cr. NII too rose 14.7% to Rs 1745 cr.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 25 points higher opening for our market on signs of ebbing of tension in Ukraine and Gaza.

In Ukraine, rebel leaders have handed over two black boxes to Malaysian experts who confirmed they were in good condition. Focus now turns to a meeting of euro zone foreign ministers today to discuss further sanctions against Russia.

In Gaza, hopes for a ceasefire are also in focus after U.S. Secretary of State John Kerry and United Nations chief  arrived in Cairo for talks aimed at stopping the bloodshed.

Yesterday, Nifty, after touching a high of 7722, eased to close at 7684. This nearly achieved our initial target of 7730 that we had set when 7600 was crossed. Once 7730 is taken out, next target, as we have been mentioning, would be 7808.

Immediate support on the hourly chart has moved up to 7570, with the stop loss of which trading longs should be held on to.

Axis Bank will report its quarterly earnings today.

PRUDENT MORNING MANTRA - 21.07.2014

NIFTY EXTENDS GAINS AFTER TAKING OUT 7600 HURDLE; STAY LONG WITH THE STOP LOSS OF 7550

WORLD MARKETS

US indices surged between 0.7%-1.6% on Friday, rebounding from its largest drop since April 10, buoyed by latest round of corporate earnings and view that geopolitical tensions appeared contained.

Google climbed after the Internet search engine tallied second-quarter results; IBM rose after the technology company posted quarterly earnings that topped expectations.

Economic report of the day had leading indicators rising 0.3% in June and the Thomson Reuters/University of Michigan's initial July reading on consumer sentiment coming in at 81.3, less than estimated.

Gold fell $7.4 to $1309 an ounce and nymex crude fell 6 cents to $103.1 a barrel.

European markets pared initial losses to close mixed on Friday.

For the week, Dow, S & P 500 and Nasdaq gained 0.9%,  0.5% and 0.4% respectively. European markets gained between 0.4%-0.9%.

AT HOME

After falling about half a percent in the initial trade, benchmark indices saw a sustained northward move through the session to end higher by three tenth of a percent. Sensex settled at 25641, up 80 points while Nifty gained 23 points to finish at 7664. BSE mid-cap and small-cap indices however lost 0.4% and 0.1% respectively. BSE IT and Teck indices gained 1.4% and 0.9% respectively, becoming top gainers among the sectoral indices while Power and Realty indices were the top losers, giving away 1.3% and 0.9% respectively.

FIIs net bought stocks and stock futures worth Rs 575 cr and 318 cr respectively but net sold index futures worth Rs 375 cr. DIIs were net sellers to the tune of Rs 283 cr.

Rupee depreciated 11 paise to close at 60.28/$, marking a one month low.

For the week, Sensex and Nifty gained 2.5% and 2.7% respectively.

Reliance Industries on Saturday reported better-than-expected quarterly earnings . Consolidated net profit rose 13.7% y-o-y to Rs. 5957 cr and revenues rose 7.2% to Rs 107905 cr. Gross Refining Margin stood at USD 8.7/bbl as against expectation of $ 8.55/bbl.

OUTLOOK

Today morning Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 25 points higher opening for our market.

Ever since Nifty crossed the 7600 hurdle on the hourly chart, we have been working with targets of 7731 followed by 7808. Nifty, on Friday closed at 7664 and is set to open about 25 points higher today, which is in-line with the above view.

7731 continues to be the immediate target on the way up. Immediate support on the hourly chart has moved up to 7550, with the stop loss of which trading longs should be held on to.

HDFC Bank and HDFC will report their quarterly earnings today.

PRUDENT MORNING MANTRA - 18.07.2014

GEOPOLITICAL CONCERNS WEIGH ON WORLD EQUITIES

WORLD MARKETS

US indices plunged between 1%-1.4% yesterday as investors fled equities and other risky assets after the crash of a passenger plane in Ukraine and as Israel launched a ground offensive in Gaza.

A Malaysia Airlines passenger plane carrying 295 people crashed over eastern Ukraine after being hit by a surface-to-air missile. Both the Ukrainian government and the pro-Russia separatists fighting in the region denied responsibility.

Subsequently, Israeli Prime Minister Benjamin Netanyahu announced the start of a ground campaign in Gaza. The decision came as a surprise as officials from the Palestinian authority and Israel were believed to be progressing in talks in Egypt aimed at a lasting cease-fire.

Earlier, US equities began the session in the red after the US and European Union imposed sanctions on Russian banks, energy companies and defense companies in another

try at getting Russia to stop its backing of Ukrainian rebels. Russian President Putin responded by saying that relations between the U.S. and Russia are in danger of reaching a "dead end" and could damage U.S. business interests in his country.

Economic reports had housing starts unexpectedly falling in June, applications for jobless benefits declining last week and a gauge of manufacturing activity in the Philadelphia region expanding in July.

European markets lost anywhere between 0.7%-2.2%. A final reading of euro zone inflation data for June came in as expected on Thursday, with consumer prices rising 0.5 percent from the year before.

Gold jumped 1.3% to $1,316.90 an ounce, Nymex crude shot up 1.9% to $109.2 a barrel, dollar gained and the yield on the benchmark US Treasury note fell 7 basis points to 2.457%.

AT HOME

Benchmark indices ended marginally higher after a rangebound trade, extending the rising streak to third straight day. Sensex gained 11 points to settle at 25561 while Nifty finished at 7640, up 16 points. BSE mid-cap and small-cap indices however outperformed significantly, gaining 1.4% each.

BSE Metal and Power indices climbed 2.5% and 2.4% respectively, becoming top gainers among the sectoral indices while Realty and Oil & Gas indices lost 0.8% and 0.4% respectively.

Tata Power surged after the Delhi Electricity Regulatory Commission approved a tariff hike of 8.32% for the three electricity distribution utilities (discoms), BSES Yamuna, BSES Rajdhani and Tata Power Delhi Distribution Ltd for the fiscal 2014-15.

Bajaj Auto reported weaker-than-expected quarterly numbers. Net profit was almost unchanged y-o-y at Rs 738 cr, dented by weak operational performance and higher depreciation charge. Revenues grew 7% to Rs 5252 cr. EBIDTA Margin slipped 170 bps y-o-y to 19.6%.

FIIs net bought stocks, index futures and stock futures worth Rs 1912 cr, 520 cr and 115 cr respectively while DIIs were net sellers to the tune of Rs 1316 cr. However the figures for the cash segment should be adjusted for M & M  deal where Goldboot holding sold 1.9% stake for Rs 1400 cr.

Rupee depreciated 6 paise to close at 60.18/$.

OUTLOOK

TCS, after market hours, reported better-than-expected 5.5% sequential dollar revenue growth for June quarter at USD 3964 mn. Consolidated net profit, as against the expectation of an 11% dip, fell 4.5% to Rs 5057 cr. EBIDTA margin stood at 26.3%, down 285 bps q-o-q but better than the expectation of 25.7%.

Today morning Asian markets are trading with average cuts of half a percent and SGX Nifty is suggesting about 35 points lower opening for our market.

Immediate support on the hourly chart is placed at 7525 which should serve as the stop loss for trading longs. 7731, followed by 7808 continue to be the targets on the way up.

PRUDENT MORNING MANTRA - 17.07.2014

NIFTY TAKES OUT 7600 HURDLE; STAY LONG WITH THE STOP LOSS OF 7520

WORLD MARKETS

US indices gained between 0.2%-0.4% yesterday, with Dow scaling fresh all-time high as investor sentiment was lifted by corporate earnings and deals.

Technology shares rallied in the wake of earnings from Intel, with the chip maker forecasting third-quarter revenue above market estimates. Apple and International Business Machines gained after saying they would jointly develop applications for business users and mobile devices. Bank of America fell after reporting a drop of 43% in second-quarter profit and a 10-cent miss on earnings per share.

Federal Reserve's Beige Book found the economy expanding at a modest to moderate pace, with consumer spending up in all of of the Fed's districts. U.S. producer prices rose 0.4% in June, versus expectations of a 0.2% increase. Another report had U.S. factory output increasing for a fifth month in June. A monthly survey from the national Association of Home Builders rose 4 points in July to 53, crossing the line into positive territory.

Dallas Fed President Richard Fisher on Wednesday said the Fed would likely start hiking interest rates early next year, if not sooner.

European markets surged between 1.1%-3.2% as investors reacted to fresh growth data from China. Data from the U.K. showed unemployment there had fallen to the lowest level since late 2008.

China's economy grew 7.5% in the second quarter, above estimates for a 7.4% increase. Other data had June industrial output rising at a stronger-than-expected 9.2% percent and retail sales increasing at an annualized 9%.

Nymex crude rose 1.2% to $101.2 a barrel and gold gained 0.2% to $1300 an ounce.

AT HOME

After a gap up opening, benchmark indices traded in a narrow range through the session but saw a sharp spike up in last hour of trade to end with hefty gains of a percent and quarter. Sensex surged 321 points to settle at 25550 while Nifty finished at 7624, up 98 points. BSE mid-cap and small-cap indices lost 1.3% and 2% respectively. All the BSE sectoral indices closed in green with Realty index leading the tally, putting on 4.3%, followed by 2.5% rise in Bankex.

IDFC surged after the RBI allowed banks to raise long-term funds to lend to affordable housing and infrastructure. IDFC obtained a banking license in April, and is seen as one of the main beneficiaries of these measures.

India's trade deficit for June touched an 11-month high at $11.76 bn. Exports rose 10.2% y-o-y to USD 26.48 bn while imports rose 8.3% to USD 38.24 bn.

Kotak Mahindra Bank reported 11.3% rise in consolidated net profit at Rs 698.3 for the quarter ended June 2014. Consolidated NII rose 9.9% to Rs 1510 cr. Gross NPAs declined 1.56% from 1.63% q-o-q  while net NPAs improved to 0.81% from 0.88%.

FIIs net bought stocks and stock futures worth Rs 622 cr and 741 cr respectively but net sold index futures worth Rs 25 cr. DIIs were net sellers to the tune of Rs 48 cr.

Rupee ended absolutely flat at 60.12/$.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 10 points higher opening for our market.

In yesterday's report we had mentioned that Immediate resistance on the hourly chart is placed around 7600, a crossover of which is required to generate a buy signal on the hourly chart, upon happening which 7808, the all time high made earlier in the month, would be the next target to eye.

Nifty yesterday soared 98 points to close at 7624, crossing the 7600 hurdle and generating a buy signal on the hourly chart. Immediate target on the way up is 7731, which is the immediate previous top on the hourly chart above which 7808 would be the next target.

Immediate support on the hourly chart is placed at 7520, with the stop loss of which trading longs should be held on to.

TCS and Bajaj Auto will report their quarterly earnings today.

PRUDENT MORNING MANTRA - 16.07.2014

NIFTY REBOUNDS AFTER HOLDING 7441 SUPPORT; BRENT CRUDE EASES TO 3-MONTH LOW

WORLD MARKETS

While Dow ended flat, S & P 500 and Nasdaq lost 0.2% and 0.6% respectively yesterday as markets measured upbeat earnings from the banking sector against concern from the Federal Reserve that valuations on small-cap and high-flying names might be "stretched."

JPMorgan Chase and Goldman Sachs Group climbed after posting better-than-expected quarterly results. Facebook and Yahoo fell after the Fed, in its monetary report, called valuations stretched for smaller social media and biotechnology stocks.

In semi-annual testimony before the Senate Banking Committee, Fed chair Janet Yellen said the central bank's monetary stimulus was still necessary, given "significant slack" in the labor market and that inflation remained under the Fed's target.

Economic reports had a measure of consumer spending rising in June, with core sales - which exclude cars, energy and food costs - up 0.6% after an upwardly revised 0.2% in May. Other data had factory activity in the New York region expanding sharply in July; U.S. import prices rising less than expected in June; and another report showed U.S. business inventories rising in May.

European markets fell between 0.5%-1.3%. Germany's ZEW economic sentiment indicator fell short of expectations, coming in at 27.1 points in July, versus 29.8 in June.

Nymex crude fell 95 cents to settle at $99.96 a barrel, falling below $100 mark for the first time since the middle of May. Brent crude fell below $106/bbl, marking a fresh 3-month low. Gold fell 0.7% to $1297 an ounce.

AT HOME

Benchmark indices ended higher by nearly a percent after a volatile trading session, breaking 5-day losing streak. Sensex gained 221 points to settle at 25228 while Nifty finished at 7526, up 72 points. BSE mid-cap and small-cap indices climbed 2.1% and 2.3% respectively. Except a 0.5% and 0.2% cut in BSE FMCG and IT indices, all other sectoral indices closed in green with Consumer Durable index and Bankex leading the tally, putting on 2.8% and 2.6% respectively.

FIIs net sold stocks worth Rs 3 cr but net bought index futures and stock futures worth Rs 67 cr and 312 cr respectively. DIIs were net buyers to the tune of Rs 472 cr.

Rupee depreciated 5 paise to close at 60.12/$.

RBI, in order to encourage infrastructure development and affordable housing, has exempted long-term bonds from the mandatory regulatory norms such as the Cash Reserve Ratio (CRR), the Statutory Liquidity Ratio (SLR) and Priority Sector Lending (PSL) if the money raised is used for funding of such projects.

OUTLOOK

China's second quarter GDP growth has come in at 7.5% y-o-y, beating an estimate of 7.4% and coming after the 7.4% expansion in the first quarter. June industrial output rose 9.2%, better than the 9% estimate. Retail sales for June came in line, up 12.4%.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points higher opening for our market.

After achieving the downside target of 7441 on Monday, Nifty rebounded yesterday to close at 7530. 7441 continues to be a crucial support, a close below which will break the higher-top higher-bottom formation.

Immediate resistance on the hourly chart is placed around 7600, a crossover of which is required to generate a buy signal on the hourly chart, upon happening which 7808, the all time high made earlier in the month, would be the next target to eye.

Kotak Mahindra Bank will report its quarterly earnings today.