Monday, July 28, 2014

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.

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