NIFTY REBOUNDS SHARPLY AFTER A DEEP PLUNGE; CAUTION ADVISED AT HIGHER LEVELS

NIFTY REBOUNDS SHARPLY AFTER A DEEP PLUNGE; CAUTION ADVISED AT HIGHER LEVELS

WORLD MARKETS                             

Dow and S & P 500 plunged 2% each while Nasdaq tumbled 2.4% with the Dow and S&P 500 wiping out gains for the year on escalating tensions between Greece and its creditors. S & P 500 suffered the worst single day fall of 2015.

Media reports suggested that Greece will not be paying a 1.6 billion euro loan installment due to the International Monetary Fund (IMF) on Tuesday.

S&P downgraded Greece to "CCC-" and said that the probability of the country exiting the euro zone is now about 50%.

Back in the US, pending home sales showed an increase of 0.9% in May, slightly below expectations.

European markets plunged 2-5%. Greece's main stock exchange was closed on Monday and will not reopen until July 6, with banks across the country also shut.

Earlier Shanghai Composite ended 3.3% lower despite initial attempts at gains following the central bank's rate cut over the weekend.

Nymex oil fell $1.3 lower at $58.33 a barrel. Gold rose $6 to $1179 an ounce.

AT HOME

After plunging more than 2% in the morning trade on the back of failure of Greek deal, Sensex and Nifty rebounded sharply in the noon trade to end lower by 0.6% and 0.8% respectively. Sensex settled at 27645, down 167 points while Nifty lost 63 points to finish at 8318. BSE mid-cap and small-cap indices lost 1.4% each. Except a 0.3% rise in BSE FMCG index, all the sectoral indices ended in red with Realty and IT indices leading the tally, giving away 2.2% and 1.7% respectively.

Tech Mahindra nosedived 7.6% after company warned of weak revenue and earnings in the April-June quarter due to higher visa costs and other headwinds.

FIIs net sold stocks and stock futures worth Rs 712 cr and 68 cr respectively but net bought index futures worth Rs 548 cr. DIIs were net buyers to the tune of Rs 906 cr.

Rupee depreciated 20 paise to end at 63.84/$.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 30 points lower opening for our market.

In yesterday's report we had mentioned that "a gap down opening would straight away take the benchmark below immediate 8330 support and in that case 8240, the 34-DMA, would be the next support to eye. Below 8240, 8125, the 61.8% retracement level of the recent 7940-8423 pullback, would be the next downside target."

The benchmark, after touching a low of 8195 in the morning trade, rebounded sharply to end at 8318, holding 34-DMA on closing basis.

However, the benchmark still is in a sell mode on the hourly chart and a sustained trading above 8370 is required to generate a buy on the hourly chart. Above 8370, 8470-8490, the major hurdle area we have been talking about, would be the next target.

8195, the low made yesterday, would be the immediate support, below which 8125, the 61.8% retracement level of the 7940-8423 upmove, would be the next support to eye.

ASIAN EQUITIES TUMBLE ON GREEK DEAL FAILURE; OUR CAUTION ON NIFTY VINDICATED

ASIAN EQUITIES TUMBLE ON GREEK DEAL FAILURE; OUR CAUTION ON NIFTY VINDICATED

WORLD MARKETS                             

US indices ended mixed on Friday, with Dow gaining 0.3%, S & P 500 falling 0.1% while the Nasdaq lost 0.6%, digesting earnings reports and awaiting resolution on the Greece debt talks.

Nike ended more than 4% higher at a record following a strong earnings report.

Greek Prime Minister Alexis Tsipras called an urgent cabinet meeting on Friday evening to discuss a bailout deal. The country's finance minister Yanis Varoufakis said that Saturday's meeting with the euro group of finance leaders will try to converge on a deal that includes debt and funding. He added that Greece has made concessions and that Athens rejects a 5-month funding proposal from lenders.

European markets, except a 0.8% lower FTSE, gained .2%-0.7%.

Earlier China's Shanghai Composite plunged more than 7%, posting its biggest one-day loss in five months.

Bond yields rose, with the U.S. 10-year Treasury yield near 2.48%. The 30-year yield climbed to 3.25%, the highest since last September 24. German 10-year bund yields leaped to 0.92%.

For the week, Dow and S & P 500 lost 0.4% each while Nasdaq lost 0.7%. European markets however so big gains of 4%-5%, except a modest 0.6% gain for FTSE.

Greece however failed to clinch a deal with its international lenders over the weekend to avert a default. Greek Prime Minister, in a surprise development announced a bailout referendum to be held on July 5, which was authorised by the Greek Parliament over the weekend.  A yes vote will mean that Greeks are willing accept the latest bailout terms offered by creditors to Athens, while a rejection will likely increase Greece's chances of exiting the Eurozone.

Greek government officials have confirmed early Monday that banks will be closed until July 6, while ATMs will reopen later in the day with a daily withdrawal limit of 60 euros. 

In another development, the People's Bank of China lowered its benchmark lending rates by 25 bps to 4.85% on Saturday, marking the fourth reduction since November, in an effort to prop up a slowing economy.

AT HOME

Benchmark indices ended modestly lower after a choppy trading session. Sensex lost 84 points to settle at 27812 while Nifty finished at 8381, down 17 points. BSE mid-cap index ended flat while the small-cap index gained 0.1%. BSE Capital Goods and Metal indices fell 1.1% and 0.9% respectively, becoming top losers among the sectoral indices while Consumer Durable and IT indices climbed 1.6% and 1.4% respectively, becoming top gainers.

FIIs net sold stocks and index futures worth Rs 204 cr and 261 cr respectively but net bought stock futures worth Rs 121 cr. DIIs were net buyers to the tune of Rs 234 cr.

Rupee depreciated 2 paise to end at 63.64/$.

Moving at a brisk pace, the Southwest Monsoon on Friday covered the entire length and breadth of the country, way ahead of schedule.

For the week, Sensex and Nifty gained 1.8% and 1.9% respectively, extending the winning streak to second consecutive week.

OUTLOOK

Today morning Asian markets are trading with cuts of 1-2% and SGX Nifty is suggesting more than 100 points lower opening for our market.

Readers would recall that for past couple of sessions we have been advising booking profits in trading longs above 8400 taking into consideration steep runup seen over previous eight sessions and looming major hurdles placed around 8470-8490.

Today's gap down opening would vindicate our caution.

In Friday's report we had also mentioned that immediate support on the hourly chart is placed around 8330, a breach of which can take the benchmark to 34-DMA placed around 8240.

Today's gap down opening would straight away take the benchmark below 8300 and in that case 8240 would be the next support to eye. Below 8240, 8125, the 61.8% retracement level of the recent 7940-8423 pullback, would be the next downside target.

8490 CONTINUES TO BE MAJOR HURDLE; 8330 IMMEDIATE SUPPORT

8490 CONTINUES TO BE MAJOR HURDLE; 8330 IMMEDIATE SUPPORT

WORLD MARKETS                             

After a positive start, US indices saw a sustained downward move through the session to end with cuts of 0.2%-0.4% as lack of resolution between Greece and its creditors weighed on sentiment.

The Eurogroup meeting of finance ministers quickly ended yesterday, without any signs of an agreement. Another meeting was scheduled for Saturday as the June 30 deadline approaches.

US Hospital stocks however surged after the U.S. Supreme Court ruled that federal subsidies that help nearly 6.4 million people pay for their Obamacare health plans are legal under the Affordable Care Act.

Weekly jobless claims came in at 271,000, slightly below expectations. U.S. consumer spending rose 0.9% for the month of May, its largest gain in nearly six years while personal income increased 0.5% last month. The services PMI fell from 56 in May to 54.6 in June, showing a slower growth rate in the services sector.

European markets ended mixed.

Nymex crude fell 57 cents or 1% to $59.70 a barrel.

AT HOME

Sensex and Nifty ended higher by 0.6% and 0.4% respectively on the expiry day of the June derivative series. In absolute terms, Sensex gained 166 points to settle at 27896 while Nifty finished at 8398, up 37 points. BSE mid-cap and small-cap indices gained 0.7% and 0.2% respectively. BSE Capital Goods index soared 2.1%, becoming top gainer among the sectoral indices, followed by 1% rise in Realty index. IT and Teck indices were the top losers, giving away 1% and 0.6% respectively.

FIIs net bought stocks and index futures worth Rs 280 cr and 2225 cr respectively but net sold stock futures worth Rs 1082 cr. DIIs were net sellers to the tune of Rs 8 cr.

Rupee depreciated 2 paise to end at 63.6175/$.

Prime Minister Narendra Modi yesterday launched the NDA government's flagship Pradhan Mantri Awas Yojana (PMAY) housing scheme, along with its long-planned Smart Cities mission and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) urban renewal initiative. As part of the three missions, the government will look to create 2 crore houses by 2022 by providing a central grant of Rs 1 lakh to Rs 2.3 lakh per house by way of a 6.5% interest subvention scheme; look to create 100 smart cities through a Rs 48,000 crore initiative; and push for urban infrastructure upgrade for 500 cities in a Rs 50,000 crore scheme.

The Reserve Bank of India yesterday released the Financial Stability Report (FSR) according to which the total bad loans for banks as percentage of total assets will rise to 4.8%t by September from 4.5% in March. The stressed assets, however, will see a fall to 4.7% by next March.

OUTLOOK

Today morning, Shanghai is down near 3%, Hang Seng is down about a percent and half, other Asian markets are flat to modestly lower and SGX Nifty is suggesting about 40 points lower opening for our market.

We continue to reiterate our view that Nifty is in the vicinity of very important hurdles in the form of 34 and 20 week moving averages placed around 8470 and 8480 respectively, followed by immediate previous top on the weekly chart placed at 8490.

Therefore we had advised booking profit in majority of the trading positions above 8400 day before yesterday and wait for the crossover of 8490 for taking fresh longs. That continues to be the view.

Immediate support on the hourly chart has now moved up to 8330, which should serve as the stop loss for remaining positions. 8240, the 34-DMA would be the next support below 8330.

BANG ON TARGET

BANG ON TARGET

WORLD MARKETS                             

Dow plunged 1% while Nasdaq and S & P 500 lost 0.7% each yesterday after negotiations between Greece and its creditors hit a stalemate.

The Eurogroup meeting yesterday ended without any agreement, raising the risks of a Greek debt default once again. Officials are slated to reconvene on Thursday at 11:00 GMT. Earlier media reports suggested that Greek Prime Minister told associates that creditors did not accepted Greece's proposed measures

In U.S. economic news, the final read on first-quarter GDP data showed a decline of 0.2%, in-line with expectations and above a previous estimate of a 0.7% contraction. Encouragingly, consumer spending was revised up to 2.1% from the initial 1.8%.

European markets, except a 0.2% higher FTSE, ended with cuts of upto 0.7%. Greek stocks fell 1.8%. On the data front, Germany's closely watched Ifo Business Climate survey index for June came in at 107.4, below expectations of 108.1.

Nymex oil fell 74 cents to $60.27 a barrel. Gold fell $4 at $1174 an ounce.

AT HOME

After gaining nearly half a percent, benchmark indices plunged about seven tenth of a percent from the top of the day in last hour to end lower by a fourth of a percent, breaking the eight day winning streak. Sensex settled at 27730, down 75 points while Nifty lost 21 points to finish at 8361. BSE mid-cap and small-cap indices lost 0.3% and 0.6% respectively.

The sudden late fall came after Greek Prime Minister Alexis Tsipras said that his government's proposed reforms have not been accepted by its international lenders. Media reports suggested that creditors have now put forward a new set of counter-proposals. A meeting of the Eurogroup of euro zone finance ministers to discuss the revised crisis plan is due to start later in the day.

Except a 0.7% and 0.4% rise in BSE Healthcare and FMCG indices respectively, all the sectoral indices ended in red with Metal and Realty indices leading the tally, giving away 1.6% and 0.9% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 93 cr, 1490 cr and 586 cr respectively. DIIs were net buyers to the tune of Rs 14 cr.

Rupee depreciated 1 paise to end at 63.595/$.

OUTLOOK

Today morning Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting about 15 points lower opening for our market.

In yesterday's report we had clearly mentioned that "Considering the steep run-up over past eight sessions and looming resistances ahead, traders would do well to book majority of profit in trading longs in 8400-8490 resistance zone for entering back on any possible dip".

The benchmark, after touching a high of 8421, saw a sharp dip in last hour to end at 8361, vindicating our view.

8400-8490 continues to be major resistance area as 8470 is where 34-week moving average is placed, 8476 is where 20 week moving average is placed and 8490 is the immediate previous top on the weekly chart. A crossover of 8490 on weekly basis would also negate a lower-top lower-bottom formation on the weekly chart, which will turn the medium term view bullish.

Traders would do well to wait for the crossover of 8490 for taking fresh longs. Immediate support on the hourly chart is placed around 8300, below which 34-DMA, placed around 8240, would be the next target.

Talks in Brussels between Mr Tsipras and Greece's creditors are expected to resume at 07:00 GMT ahead of a Eurogroup meeting of eurozone finance ministers scheduled for 11:00 GMT.

The three-week monsoon session of Parliament will begin from July 21.