PRUDENT MORNING MANTRA - 08.07.2014

NIFTY SET TO ACHIEVE 7800 TARGET; STAY LONG WITH THE STOP LOSS OF 7710

WORLD MARKETS

US indices fell between 0.3%-0.8% yesterday as market looked to the start of the earnings season and considered whether the Fed would hike interest rates sooner than expected.

Goldman Sachs advanced its projected timing for the Fed to raise interest rates, forecasting the central bank would increase its benchmark rate in the third quarter of 2015 instead of the first quarter of 2016.

Aluminium major Alcoa is set to kickstart corporate earning season today and market would watch out for the guidance for the second half.

Nymex crude fell 0.5% to $103.5 a barrel; Gold eased 0.3% to $1317 an ounce.

European markets tumbled 0.6%-1.4% after data showed German industrial production surprisingly fell 1.8% in May, sparking fears of a slowdown in Europe's largest economy.

AT HOME

After a gap up opening, benchmark indices traded in a narrow range through the session and finally ended higher by about half a percent, marking a fresh all-time high. Sensex gained 138 points to settle at 26100 while Nifty finished at 7787, up 35 points. BSE mid-cap and small-cap indices gained 0.1% and 0.6% respectively. BSE IT and Teck indices climbed 2.6% and 2.2% respectively, becoming top gainers among the sectoral indices while Bankex and Oil & Gas indices lost 1.2% and 0.9% respectively.

FIIs net bought stocks and stock futures worth Rs 199 cr and 222 cr respectively but net sold index futures worth Rs 851 cr. DIIs were net sellers to the tune of Rs 85 cr.

Rupee plunged 29 paise to close at 60.01/$.

OUTLOOK

Today morning Asian markets are trading with modest cuts but SGX Nifty is suggesting a marginally higher start for our market.

Nifty yesterday gained 35 points to close at 7787, moving a step closer to the 7800-7850 target we have projected when the descending channel breakout had happened last Monday.

7800-7850 continues to be the immediate target above which 8100 would be the next major target. Immediate support on the hourly chart has moved up to 7710, with the stop loss of which trading longs should be held on to.

Today Railway Budget for 2014-15 would be presented in Lok Sabha. Key expectation are raising FDI in railways, introduction of the public-private partnerships (PPP) concept to tap external sources of funding, higher budgetary allocation for the sector and announcement of high speed trains and corridor.