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.
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