Thursday, July 3, 2014

PRUDENT MORNING MANTRA - 03.07.2014

7700 CONQUERED, 7800 NEXT; ECB, US EMPLOYMENT DATA IN FOCUS TODAY

WORLD MARKETS

US indices ended mixed with marginal changes with Dow and S & P 500 closing at fresh all-time high ahead of Thursday's non-farm payroll report.

ADP jobs report, viewed as an indicator of how the U.S.'s employment report will read, showed private sector job creation surged in June, with companies creating 281,000 new positions. May factory orders reported a greater decline than expected.

Fed Chair Janet Yellen, in prepared remarks for a speech at the International Monetary Fund, said that monetary policy has limitations in addressing financial stability risks.

European markets, except a modest cut in CAC, ended with modest gains ahead of the European Central Bank's latest policy decision.

Eurozone May producer price data fell for a fifth month, by 0.1% on the month.

Nymex crude lost $1.2 to $104.2 a barrel.

AT HOME

Benchmark indices surged a percent and quarter yesterday, extending the rising streak to fourth straight day and closing at fresh all-time high. Sensex soared 325 points to settle at 25841 while Nifty finished at 7725, up 90 points. BSE mid-cap and small-cap indices gained 0.8% and 1.1% respectively. All the BSE sectoral indices closed in green with Metal and Power indices leading the tally, putting on 2% and 1.9% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 1291 cr, 561 cr and 76 cr respectively. DIIs were net sellers to the tune of Rs 408 cr.

Rupee saw its biggest gain in one and a half month by appreciating 38 paise to close at 59.68/$, the strongest level in more than two weeks.

Hero Moto reported 8% y-o-y rise in June sales at 5.41 lakh units while TVS reported 23% jump at 2.02 lakh units.

OUTLOOK

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

Ever since Nifty broke out of the descending channel formation on Monday, we have been vouching for 7800-7850 region as the next target. The benchmark has gained more than 100 point since then to close at 7725 yesterday and is on track to achieve the 7800 target.

Immediate support on the hourly chart has moved up to 7590, with the stop loss of which trading longs should be held on to.


With 4th July being a holiday, US government's June nonfarm payrolls will come out today and is expected to show 215,000 new jobs. Also on tap is a monetary policy decision from the European Central Bank. After revealing a raft of stimulus measures at its last meeting, the central bank is unlikely to act this time.

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