EQUITIES EXTEND LOSSES ON GREEK JITTERS, CAUTION OVER FED; 8070 CONTINUES TO BE IMMEDIATE HURDLE FOR NIFTY

EQUITIES EXTEND LOSSES ON GREEK JITTERS, CAUTION OVER FED; 8070 CONTINUES TO BE IMMEDIATE HURDLE FOR NIFTY

WORLD MARKETS                             

After falling nearly a percent in the initial trade, US indices recouped nearly half of the losses through the session to end lower in the vicinity of half a percent. Jitters over stalled Greece debt talks and the caution over upcoming two-day Federal Reserve meeting weighed on the sentiment.

Greece and its creditors failed to come to a deal over the weekend because the country did not accept demands for deeper reforms of pensions, value-added tax (VAT) and of its administration, labor markets and industry. The European Commission yesterday said that Greece's creditors have made substantial concessions, and Germany's EU commissioner said the time had come to prepare for a "state of emergency".

ECB President Draghi said that the ECB would continue approving emergency funding for Greek banks as long as they have enough cash and collateral to operate. He added "the ball lies squarely in the camp of the Greek government to take the necessary steps."

Back in the US, economic data was mixed. The New York Fed's Empire State general business conditions index fell from 3.09 in May to negative 1.98 in June, hitting its lowest level since January 2013. May industrial production unexpectedly fell, dropping 0.2% in May. The National Association of Home Builders (NAHB) housing market index rose more than expected, gaining 5 points in June to the highest since last September.

US 10-year Treasury yield rose to 2.36% after hitting a low of 2.31% and the German 10-year bund yield gained to 0.82% after earlier dipping below 0.8%. Nymex oil fell 44 cents to $59.52 a barrel. Gold rose $7 to $1186.

European markets tumbled 1.1%-2.4% with bank stocks leading the losers. Greek stocks ended lower by 4.7% and peripheral bond yields spiked. Greek 10-year yields hit 12.2% at the close, up from its 11.8% close on Friday.

Russia's central bank cut its key interest rate by 100 bps to 11.5%, marking the fourth consecutive month of cuts, in a further bid to stimulate economic growth.

AT HOME

Sensex and Nifty gained 0.6% and 0.4% after a choppy trade, extending the rising streak to second day. Sensex settled at 26587, up 161 points while Nifty gained 31 points to finish at 8014. BSE mid-cap index ended flat while the small-cap index gained 0.4%. BSE Auto and Healthcare indices gained the most among the sectoral indices, rising 1.1% and 1% respectively. Consumer Durable and Metal indices were the top losers, giving away 0.8% and 0.6% respectively.

FIIs net sold stocks and index futures worth Rs 605 cr and 146 cr respectively but net bought stock futures worth Rs 133 cr. DIIs were net buyers to the tune of Rs 650 cr.

Rupee depreciated 10 paise to end at 64.16/$.

WPI based inflation stood at -2.36% in May as compared to -2.65% for April. This was the seventh straight fall in WPI aided by fall in Food articles inflation (3.8% vs 5.73% MoM), Manufactured products inflation (-0.64% Vs -0.52% MoM) and Primary articles inflation (-0.77% Vs -0.25% MoM).

Advance tax payments of the top nine companies registered in Mumbai for the three months ending 30 June showed a 13% increase from a year earlier. Bank of India, Yes Bank and HDFC Bank paid 92%, 36% and 22% higher tax respectively. SBI paid 4% higher while BoB paid 3% lower tax. Colgate and HDFC paid 12% and 42% higher while BPCL paid 5% lower.

Oil marketing companies hiked petrol price by Rs 64p/ltr but cut diesel price by Rs 1.35/ltr yesterday.

OUTLOOK

Today morning Asian markets are trading with cuts of 0.5%-1% and SGX Nifty is suggesting about 15 points lower opening for our market.

In yesterday's report we had mentioned that the immediate hurdle on the hourly chart is placed around 8070 which should serve as the stop loss for trading shorts.

Nifty, after touching a high of 8058, fell to end at 8014.

8070 continues to be immediate hurdle, above which 8160-8190, where the previous two tops on hourly charts are placed, would be the next resistance area.

On the way down, 7940, the bottom made last week, is the immediate support, upon breach of which 7800 would be the immediate support to eye.

US Fed begins its two-day meeting today. Markets will scrutinize the statement and conference due tomorrow for indications on the timing of a short-term interest rate hike, for which consensus is September.