APPROACHING CRUCIAL SUPPORTS

APPROACHING CRUCIAL SUPPORTS

WORLD MARKETS                             

Dow and S & P 500 lost 0.5% and 0.2% respectively, reacting to lackluster earnings reports of major companies while Nasdaq gained 0.4% on the back of strength in biotech shares.

IBM's revenues continued to decline for the 12th straight quarter, DuPont's earnings were affected by FX headwinds and Travelers' missed both the top and bottom-line.

European markets, except a 0.4% lower Italy, gained upto 0.4%. Germany’s ZEW economic sentiment index dipped to 53.3 in April from 54.8 in March, missing expectations. Greece closed more than 3% lower and government bond yields soared amid growing concerns the country might default on its hefty debt burden and/or leave the euro zone.

Nymex crude fell 2% or $1.12 to $55.26 a barrel.

AT HOME

Benchmark indices ended lower by about eight tenth of a percent after a choppy trade, extending the losing streak to fifth straight session and closing at the lowest level since 27th March. Sensex lost 210 points to settle at 27676 while Nifty finished at 8378, down 70 points. BSE mid-cap and small-cap indices lost 0.4% and 0.3% respectively. Except a 0.1% each rise in BSE Metal and Consumer Durable indices, all the sectoral indices ended in red with Healthcare index leading the tally, plunging 3.2%, followed by 1.3% cut in Auto index.

Sun Pharma plunged after Daiichi Sankyo sold its entire 8.9% stake in the company via multiple blocks at between Rs 930-968 per share (lower end of the band) amounting to around $3.6 bn.

FIIs net bought stocks worth Rs 17489 cr which included about Rs 18000 on account of Sun Pharma deal, stripped of which net selling stood at around Rs 500 cr. They net bought index futures worth Rs 319 cr but net sold stock futures worth Rs 1294 cr. DIIs were net buyers to the tune of Rs 1365 cr.

Rupee appreciated 6 paise to end at 62.85/$.

Wipro reported worse than expected 1.2% in IT services revenues at USD 1.77 bn. Rupee revenues fell 0.9% to Rs 11242 cr. On constant currency basis, dollar revenue grew 1.2% to USD 1.82 bn. which was within its guidance range of USD 1.81-1.85 billion. However, this was lower compared its peers TCS (1.6%) and HCL Technologies (2.7%). For the April-June quarter, company expects IT services revenues in the range of USD 1.76-1.79 bn, implying a sequential growth of negative 0.5% to positive 1%.

HCL Tech reported 12.2% dip in consolidated net profit at Rs 1683 cr. Rupee revenue declined 0.2% to Rs 9267 cr while dollar revenue was flat at USD 1.49 bn. In constant currency terms dollar revenues rose 2.7%, lower than the 3% estimate.

OUTLOOK

Today morning Asian markets are trading with gains of 0.2%-1.2% but SGX Nifty is suggesting about 15 points lower opening for our market.

In yesterday's report we had mentioned that Nifty is close to some crucial supports in the form of 34-week moving average placed at 8416 and a trendline adjoining recent bottoms on the weekly chart placed around 8350. We had therefore advised booking profit in short positions as 8350 approaches.

The benchmark, after touching a low of 8352, recovered somewhat to close at 8378.

8350 continues to be immediate support below which 8269, the bottom made in March, would be very crucial support to eye. A weekly close below 8269 would confirm a lower-top lower-bottom formation on the weekly chart and would turn the medium term view negative.

Meanwhile considering the fact that Nifty is heavily oversold on the hourly chart and also made a positive divergence in yesterday, traders would do well to book profits in short positions and wait for the further cues for taking a fresh view. Alternatively, immediate resistance, placed around 8610, can be kept as a stop loss in trading shorts.

MET department will release its first monsoon forecast today.