DOLLAR CLIMBS WHILE GOLD, OIL TUMBLE ON STRONG HOUSING DATA

DOLLAR CLIMBS WHILE GOLD, OIL TUMBLE ON STRONG HOUSING DATA

WORLD MARKETS                             

Dow gained 0.1% while S & P 500 and Nasdaq lost 0.1% and 0.2% yesterday as investors eyed renewed gains in yields and the dollar ahead of the Federal Reserve meeting minutes.

April's housing starts totaled 1.135 million in April, nearly a seven-and-a-half year high and above the 1.020 million estimate. The beat follows weak readings of little above 900,000 in February and March.

The US 10-year Treasury yield traded as high as 2.29%, while the 30-year yield briefly topped 3.08%. Dollar index rose more than a percent to 95.31 from 94.16, with the euro falling to a two-week low of $1.1121. Nymex oil fell $2.17 or 3.65% to $57.26 a barrel. Gold eased $21 to $1207 an ounce.

European markets soared 0.4%-2.2% on comments from a member of the ECB's executive board that ECB would front-load an asset purchase scheme. Euro zone bond yields fell on the news, with the 10-year benchmark German Bund yield briefly falling to 0.56% percent before rising to 0.61%.

On the data front, U.K. inflation data for April showed that consumer prices fell into deflationary territory for the first time since 1960. Meanwhile, a second reading of euro area inflation confirmed it was flat in April compared to the year before.

German investor sentiment fell sharply in May from the month before, according to a closely-watched survey published yesterday.

AT HOME

After gaining nearly two third of a percent, benchmark indices saw a sudden steep fall in the noon trade to finally end modestly lower. Sensex settled at 27645, down 42 points while Nifty lost 8 points to finish at 8366. BSE mid-cap index lost 0.2% but the small-cap index managed to end higher by 0.4%. BSE Auto and Oil & Gas indices were the top losers, giving away 0.8% and 0.4% respectively while IT and Consumer Durable indices gained 0.7% and 0.5% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 48 cr, 648 cr and 327 cr respectively. DIIs were net buyers to the tune of Rs 451 cr.

Rupee appreciated 4 paise to end at 63.67/$.

OUTLOOK

Today morning Nikkei is up more than half a percent after data showed economy expanded an annualized 2.4% from the previous quarter, beating expectations for growth of 1.5%, indicating that Japan may be headed toward a path of steady growth. Other Asian markets are mixed with modest changes and SGX Nifty is suggesting about 25 points higher opening for our market.

In yesterday's report we had mentioned that by closing above 8333, Nifty had confirmed a higher-top higher-bottom formation on the daily chart and the upside targets to eye are 8450, followed by 8600.

Nifty, after touching a high of 8428, slipped to end at 8366 in yesterday's trade. 8430-8470 is the immediate resistance area as 8430 is where 34-week moving average is placed while 8470 represents upper band of bollinger on the daily chart.

Once this resistance area is taken out, Nifty can head to 8600, where the trendline adjoining tops made in March and April is placed.

8270 continues to be immediate support, with the stop loss of which long positions can be held on to.

Tata Steel will report its quarterly earnings today.