PRUDENT MORNING MANTRA - 21.08.2014

NIFTY EXTENDS CONSOLIDATION; TRAIL STOP LOSS TO 7795

WORLD MARKETS                             

Dow and S & P 500 gained about three tenth of a percent, with the S & P 500 closing less than 5 points away from its intraday record high. Nasdaq closed flat.

Minutes from the Federal Reserve's last policy meeting showed that some Fed officials want a "relatively prompt" rate hike based on the economy's progress. But most members agreed more data was needed to move up the schedule of rate hikes.

Geopolitics continued to be in focus. U.S. President Obama condemned the beheading of an American journalist by Islamist militants and vowed the U.S. would do what it must to protect its citizens. In eastern Europe, Kiev-backed forces are steadily gaining the upper hand in eastern Ukraine and are tightening the battle around main rebel bastions of Donetsk and Lyhansk.

European markets, except a modestly higher Spain, ended with modest cuts. In the U.K., two members of the Bank of England's interest-rate-setting committee voted to raise rates by 0.25 bps in August, according to minutes released yesterday.

Nymex crude rose $1.6 to $96.1 a barrel; Gold lost $1.5 to $1295 an ounce.

AT HOME

After a positive start, benchmark indices saw a sustained downward move through the session to end lower by about a third of a percent, breaking the six-day winning streak. Sensex lost 106 points to settle at 26314 while Nifty finished at 7875, down 22 points. BSE mid-cap and small-cap indices however gained 0.1% and 0.9% respectively. BSE Oil & Gas index tumbled 1.3%, becoming top loser among the sectoral indices, followed by 0.7% cut in FMCG index. Healthcare index soared 2.9%, becoming the top gainer, followed by 0.7% rise in Power index.

FIIs net bought stocks, index futures and stock futures worth Rs 251 cr, 277 cr and 180 cr respectively. DIIs were net sellers to the tune of Rs 481 cr.

Rupee appreciated 6 paise to close at 60.61/$.

OUTLOOK

China's flash PMI for August has come in at a three month low of 50.3 as against July's reading of 51.7 and expected figure of 51.5.

Asian markets, except Nikkei, are trading with modest cuts owing to this data. SGX Nifty is suggesting a flattish start for our market.

It was second day of consolidation for Nifty as after touching a fresh all-time high of 7923 in the opening trade, the benchmark slipped through the session to end at 7875.

Immediate support on the hourly chart has moved up to 7795 with the stop loss of which trading longs should be held on to.