PRUDENT MORNING MANTRA - 25.08.2014

STAY LONG WITH THE STOP LOSS OF 7855

WORLD MARKETS

Dow and S & P 500 ended lower by about a fourth of a percent on Friday, with the S & P 500 breaking a four-session winning streak, as markets weighed rising tension between Russia and Ukraine and speeches by European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen.

Speaking at the Central Bankers' gathering at Jackson Hole, Yellen reiterated that slack remains in the U.S. labor market even as the American economy continues a five-year recovery and Draghi expressed confidence that stimulus already announced and a weaker euro would help the euro-zone economy, but the ECB is ready to do more if needed.

A Russian aid convoy finally passed into Ukrainian territory weighed on markets. Ukrainian authorities said the move amounted to a "direct invasion" of the country by Russia, and events were closely watched for a flare up in tensions. NATO said that it was observing an alarming increase in Russian forces near Ukraine.

European markets ended with cuts of upto 0.9%.

Gold rose $5 to $1280 an ounce.  Nymex crude fell 31 cents to $93.6 a barrel.

Israel launched more air strikes on Gaza on Sunday.

                                                             

AT HOME

After a positive start, benchmark indices traded in a narrow range through the session and ended higher by nearly a fourth of a percent, marking a fresh record high. Sensex gained 59 points to settle at 26420 while Nifty finished at 7913, up 22 points. BSE mid-cap index gained 0.2% while the small-cap index ended absolutely flat. BSE IT index and Bankex gained 1.6% and 1% respectively, becoming top gainers among the sectoral indices while Realty and FMCG indices lost 0.8% and 0.5% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 302 cr, 449 cr and 297 cr respectively. DIIs were net sellers to the tune of Rs 184 cr.

Rupee appreciated 20 paise to close at 60.46/$.

For the week, Sensex and Nifty gained 1.2% and 1.6% respectively.

OUTLOOK

Today morning, Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 10 points lower opening for our market.

We have been bullish on Nifty ever since 7690 hurdle was taken out on 12th August and have been advising holding on to trading longs with a trailing stop loss. That continues to be the view.

Immediate support on the hourly chart is now placed at 7855, only a sustained trading below which would warrant a review of the bullish stance.

On the way up, an upward sloping trendline adjoining major tops on the daily chart presents a resistance around 8000 and that would be the next target to eye.