NIFTY PLUNGES 2.4% FOR THE WEEK; VINDICATES OUR CAUTION
WORLD MARKETS
Extending Thursday’s 2% plunge, US indices fell about four tenth of a percent on Friday with the S&P 500 recording its worst weekly loss since June 2012.
Ahead of the opening, stock futures trimmed the losses after the data sowed that the U.S. added 209,000 jobs last month, below expectations for 233,000 and the jobless rate rose to 6.2%, easing concerns about an forthcoming U.S. interest rate hike.
Other economic data had the ISM manufacturing index hitting 57.1 in July; construction spending falling 1.8% in June and a gauge of consumer sentiment from the University of Michigan/Thomson Reuters declining slightly in July.
Dallas Fed President Richard Fisher said he believes more of his colleagues on the Federal Open Market Committee are coming around to his view that the rates could start rising early next year if the data keep coming in stronger.
International Swaps and Derivatives Association effectively declared Argentina in default.
European markets tumbled anywhere between 0.8%-2%. Eurozone manufacturing PMI for July came in at 51.8, matching June's reading but below an earlier flash estimate of 51.9. Trading in shares of Banco Espirito Santo were suspended by regulators in Portugal pending information about the troubled bank.
Nymex crude fell 0.8% to $97.35 a barrel, and gold rose 1% to $1,295 an ounce. The dollar edged lower against the currencies of major U.S. trading partners and the US 10-year Treasury yield fell 6 bps to 2.495%.
For the week, Dow, S & P 500 and Nasdaq lost 2.8%, 2.7% and 2.2% respectively. European markets tumbled anywhere between 1.7%-4.5%, with DAX leading the tally.
AT HOME
It was an ugly finish to the week as benchmark indices plunged a percent and half on Friday to close at the lowest level since 16th July. Sensex slumped 414 points to settle at 25481 while Nifty finished at 7602, down 119 points. BSE mid-cap and small-cap indices lost 0.8% and 1% respectively. All the BSE sectoral indices ended in red with Consumer Durable and Oil & Gas indices leading the tally, giving away 3.3% and 2.2% respectively.
India's HSBC manufacturing PMI reached a 17-months peak of 53 in July, up from 51.5 in June.
July Auto sales was a mixed bag. TVS Motors, Maruti and Hero Moto reported 32%, 21.7% and 9% respective y-o-y rise while Tata Motors and M & M showed 23% and 4% dip respectively.
FIIs net sold stocks and index futures worth Rs 1073 cr and 1146 cr respectively but net bought stock futures worth Rs 519 cr. DIIs were net buyers to the tune of Rs 1075 cr.
Rupee plunged 63 paise to close at 61.18/$.
For the week, Sensex and Nifty lost 2.5% and 2.4% respectively.
OUTLOOK
Data over the weekend showed China's services PMI for July eased to 54.2 from 55 in June, hitting a six-month low as new orders rose at their weakest rate in a year.
Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 40 points higher opening for our market.
In Friday's report we had cautioned that Nifty had already started making lower-tops and lower-bottoms on the hourly chart and that support levels to watch on the way down are 7680, 7630 and 7580, which are the 38.2%, 50% and 61.8% retracement levels of the recent 7422-7840 upmove.
Nifty, on Friday, plunged 119 points and touched a low 7593 before closing at 7602, nearly achieving 7580 target and vindicating our caution.
7580 is the important immediate support to watch, as that is the 61.8% retracement level of the recent 7422-7840 upmove as mentioned above and a breach of which would open up the possibility of the retest of the 7422 bottom.
Immediate resistance on the hourly chart is placed around 7750, a crossover of which is required to generate a buy signal on the hourly chart and get the bulls back in the game.
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