AFTER FED, FOCUS TURNS TO GREECE; 8015 IMMEDIATE SUPPORT, 8160-8190 RESISTANCE AREA FOR NIFTY

AFTER FED, FOCUS TURNS TO GREECE; 8015 IMMEDIATE SUPPORT, 8160-8190 RESISTANCE AREA FOR NIFTY

WORLD MARKETS                             

US indices gained about a fifth of a percent yesterday amid choppy trade after the Federal Reserve said the U.S. economy is likely strong enough to withstand a rate hike later this year.

The Federal Reserve held interest rates at zero and provided only faint clues about when the first hike in nine years might occur. The central bank downgraded the GDP forecast for the year to 1.8-2% while raising longer-term growth expectations.

Stocks extended early gains as Yellen said during an afternoon press conference that markets should focus on the pace of rate increase rather than the timing of the initial hike.

The U.S. 10-year Treasury yield was 2.31%, unchanged for the day. The 2-year yield initially spiked before giving back early gains to trade at 0.67%. Dollar index fell more than half a percent, with the euro near $1.134.

Markets also kept an eye on the Greece debt negotiations ahead of the euro group meeting of regional finance ministers on Thursday.

Greek negotiator Euclid Tsakalotos yesterday said that the country is willing to make concessions but pension cuts cannot be on the agenda. He confirmed that Athens does not have enough funds to make the debt repayment to the International Monetary Fund due on June 30.

The European Central Bank raised the Emergency Liquidity Assistance for Greece to 84.1 euros from 83.0 euros. Greek banks are reliant on this funding and if the central bank curbs this liquidity, Greece may have no option but to impose capital controls.

European markets lost 0.4%-1%.

AT HOME

Benchmark indices gained six tenth of a percent yesterday, extending the winning streak to fourth day and closing at one-week high. Sensex settled at 26833, up 146 points while Nifty rose 44 points to finish at 8092. BSE mid-cap and small-cap indices soared 1.4% and 1.3% respectively. Except a 0.4% and 0.2% cut in BSE Power index and Bankex respectively, all the sectoral indices ended in green with Consumer Durable and Healthcare indices leading the tally, climbing 2.3% and 1.6% respectively.

The Union Cabinet today approved an increase in MSP (minimum support price) of certain farm products by 4-6%. That of paddy was raised by 3.7% to Rs. 1410 per quintal. For pulses, the hike was about 6% including a bonus hike.

Government also hiked import duty on long steel products from 5.5% to 7.5% and that of flat steel products from 7.5% to 10%.

Also approved was the low-cost housing scheme aiming to provide houses for all by 2022. The scheme will have provisions for tax incentives on interest rates charged by banks on loans for the poor section of the society.

FIIs net sold stocks and index futures worth Rs 941 cr and 217 cr respectively but net bought stock futures worth Rs 786 c. DIIs were net buyers to the tune of Rs 1447 cr.

Rupee appreciated 13 paise to end at 64.1075/$.

OUTLOOK

Today morning Asian markets are trading flat to modestly lower and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had reiterated that 8070 is the immediate hurdle on the hourly chart and traders can initiate fresh longs with the stop loss of 8020 once the benchmark sustains above that.

Nifty crossed this hurdle and rose all the way to 8137 but came off the high of the day to end at 8092.

Immediate support on the hourly chart is currently placed around 8015, with the stop loss of which trading longs can be held on to.

On the way up 8160-8190 continues to be immediate resistance area above which 34-DMA, placed around 8220, would be the next hurdle to eye.

Eurogroup finance ministers will meet today to further deliberate on Greece but an "aid-for reform" deal is unlikely to be sealed today.