US EQUITIES TUMBLE ON CONCERNS OVER UKRAINE, FED TIGHTENING; 7750 CONTINUES TO BE IMMEDIATE RESISTANCE IN NIFTY
WORLD MARKETS
US indices tumbled 0.7%-1% yesterday, more than wiping out Monday's gains, on worries that tensions between Russia and Ukraine could escalate into a military conflict and concerns that the strengthening economy will lead to higher interest rates.
Poland's foreign minister said that Russia was amassing battalion groups at the Ukrainian border either to put pressure on the country or to invade it.
Better-than-expected economic reports heightened speculation that the Federal Reserve might hike rates sooner than expected. The Institute for Supply Management's service index climbed to 58.7 in July, its highest reading since December 2005. Orders for U.S. factory goods rose 1.1% in June.
Earlier data from China showed services PMI dropped to 50.0 in July from 53.1 in June.
Major European markets ended with modest gains, although gains were capped by weakness in the Italian and Spanish markets.
The divergence in performance came after a state bailout for Portugal's troubled lender Banco Espirito Santo raised concerns that investors could be cutting their exposure to the euro zone's weaker nations.
Nymex crude fell 91 cents to $97.4 a barrel, marking a six month low.
AT HOME
Benchmark indices ended higher by about three fourth of a percent after a choppy trading session, extending the rising streak to second day. Sensex gained 185 points to settle at 25908 while Nifty finished at 7746, up 63 points. BSE mid-cap and small-cap indices gained 0.8% and 1.1% respectively. Except a 0.2% cut in BSE Capital Goods index, all other sectoral indices ended in green with Realty and Auto indices leading the tally, climbing 2.6% and 2.1% respectively.
RBI, in its bi-monthly monetary policy review, kept key policy repo rate unchanged as widely expected. The apex bank however cut the SLR by 50 bps to 22% and also brought down the ceiling on banks’ total holdings of SLR securities in the held to maturity category, from 24.5% of their net demand and time liabilities to 24%. The tone of the policy was slightly hawkish as governor Rajan stressed that the goal was to bring inflation down to 6% by January 2016, while warning of upside risks to that target.
India's HSBC services PMI eased to 52.2 in July from June's 17-month high of 54.4. The composite PMI eased to 53 from June's 16-month high of 53.8.
FIIs net bought stocks, index futures and stock futures worth Rs 53 cr, 290 cr and 729 cr respectively. DIIs were net buyers to the tune of Rs 62 cr.
Rupee appreciated 9 paise to close at 60.84/$.
Hero Motocorp missed street expectations on all parameters with June quarter net profit growing 2.6% to Rs 563 cr, impacted by weak operational performance. Revenue grew 14.2% to Rs 7037 cr. Operating margin declined 130 bps to 13.5%.
OUTLOOK
Today morning. Asian markets are trading with average cuts of half a percent and SGX Nifty is suggesting about 25 points lower opening for our market.
In yesterday's report we had mentioned that while Nifty has rebounded after holding 7582 support, a crossover of 7750 is required to generate a buy signal on the hourly chart.
Nifty yesterday touched a high of 7751 before closing at 7746 and is set to open about 25 points lower today.
7750 continues to be immediate resistance. Traders can initiate fresh longs with stop loss of 7700 if Nifty crosses and sustains above that for a target of 7840.
Jindal Steel will report its quarterly earnings today.
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