ASIA TUMBLES ON IRAQ WORRIES; SBI EARNINGS IN FOCUS
WORLD MARKETS
Reversing an initial rise, US indices tumbled half a percent yesterday, with the Dow falling to its lowest level since April, amid unease over the Ukraine crisis and fresh developments on the Iraq front.
After the US air dropped food and medicine to aid as many as 40,000 religious minorities in Iraq, expectations got built that President Obama is weighing air-strikes against the Islamic State in Iraq and Syria, or ISIS.
Stocks had opened higher on upbeat data which showed weekly jobless claims declining by 14,000 to 289,000, and the four-week average falling to 293,500, the lowest since 2006.
European markets plunged between 0.6%-1.9%. The European Central Bank held interest rates unchanged, as expected. At a news conference after the ECB move, ECB President Mario Draghi reaffirmed the ECB would consider unconventional moves, such as the buying of asset-backed securities, should its medium-term outlook for inflation change.
In the U.K., the Bank of England left interest rates and its asset purchase target unchanged, as an improving economy continued to add to speculation that a rate hike could be around the corner.
On the data front, Germany's industrial output rose only 0.2% month-on-month in June, after last month's hefty fall.
Gold rose 0.4% to $1312 an ounce; Nymex crude gained 0.4% to $97.3 a barrel. US 10-year Treasury yield fell 6 bps to 2.416%.
AT HOME
Benchmark indices ended lower by three tenth of a percent after a choppy trading session, extending the losing streak to second day. Sensex lost 76 points to settle at 25589 while Nifty finished at 7649, down 23 points. BSE mid-cap and small-cap indices lost half a percent each. Except a 0.8% and 0.5% rise in BSE Consumer Durable and Oil & Gas indices, all other sectoral indices ended in red with IT and Teck indices leading the tally, giving away 1.3% and 1.1% respectively.
IT stocks fell after Cognizant Technology Solutions, the Nasdaq-listed information technology services company, scaled down its annual revenue growth estimate, which dragged its shares down about 14% in early trade.
FIIs net sold stocks and index futures worth Rs 73 cr and 419 cr respectively but net bought stock futures worth Rs 210 cr. DIIs were net buyers to the tune of Rs 229 cr.
Rupee appreciated 27 paise to close at 61.22/$.
OUTLOOK
Today morning, Asian markets are trading with deep cuts in the vicinity of a percent after reports that the US President Obama ha authorised the U.S. military to conduct air-strikes against Islamist forces as needed. SGX Nifty is suggesting about 60 points lower opening for our market.
After today's gap down opening, Nifty would be at a crucial juncture. A close below 7593, which is the bottom made last week, would confirm a lower-top lower-bottom formation on the daily chart. 7422, the low made in July would be the next downside target in that case.
In our latest weekly and subsequent daily reports, we have been advising holding on to negative bias until Nifty crosses 7750. That continues to be the view.
SBI and M & M will report their quarterly earnings today.
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