8670 CONTINUES TO BE IMMEDIATE HURDLE; RIL, AXIS BANK EARNINGS IN FOCUS

8670 CONTINUES TO BE IMMEDIATE HURDLE; RIL, AXIS BANK EARNINGS IN FOCUS

WORLD MARKETS                             

US indices fell in the vicinity of six tenth of a percent, weighed down by lackluster earnings.

Caterpillar fell 3.6% after revenues missed estimates and the firm also cut its revenue forecast for the year. 3M and American Express lost 3.8% and 2.5% after revenue missed expectations. General Motors closed up about 4% after posting record North American profit and forecast that the second half of the year will be stronger than the first.

In economic news, weekly jobless claims came in at 255,000, their lowest level since 1973. The June leading economic indicator index came in at 123.6, a gain of 0.6%.

Nymex oil fell 74 cents or 1.5% at $48.45 a barrel, its lowest finish since March 31. Brent fell 90 cents to $55.25 a barrel.

European markets, except a marginally higher Italy, saw modest cuts after a mixed bag of earnings from some of Europe's largest companies.

AT HOME

Benchmark indices ended lower by half a percent after a choppy trading session. Sensex lost 134 points to settle at 28371 while Nifty finished at 8590, down 44 points. BSE mid-cap index lost 0.2% while the small-cap index gained 0.5%. BSE Consumer Durable index soared 1.6%, becoming top gainer among the sectoral indices, followed by 0.5% rise in Auto index. Teck index and Bankex were the top losers, giving away 0.8% and 0.7% respectively.

FIIs net bought stocks worth Rs 185 cr but net sold index futures and stock futures worth Rs 584 cr and 358 cr respectively. DIIs were net sellers to the tune of Rs 276 cr.

Rupee depreciated 18 paise to end at 3-week low of 63.76/$.

Parliament could not transact any business for the third day in a row as deadlock prevailed between the Opposition and the ruling side over the Lalit Modi and Vyapam issues.

Bajaj Auto plunged 5.2% after topline and EBIDTA missed forecast. Net profit rose 37.2% y-o-y to Rs 1015 cr while revenues rose 6.9% to Rs 5614 cr. Operating margin expanded by 270 bps to 20.3%.

Lupin tumbled 5.2% after quarterly profit dipped 16% y-o-y to Rs 525 cr. Revenues slipped 5.7% to Rs 3150 cr. Operating profit margin declined 750 bps to 25.9%.

Wipro reported slightly higher-than-estimated 1.1% sequential growth in first quarter dollar revenue at USD 1.79 bn. Consolidated profit declined 3.7% q-o-q to Rs 2188 cr. and revenue grew 3% to Rs 11577 cr. The company expects its IT services dollar revenue to be in range of USD 1.82-1.85 bn in July-September quarter, a growth of 1.5-3.5% q-o-q.

OUTLOOK

Today morning Asian markets are trading with cuts in the vicinity of half a percent and SGX Nifty is suggesting about 20 points lower opening for our market.

In yesterday's report we had mentioned that after Wednesday's mammoth rebound, Nifty was again close to 8670 hurdle, and had advised waiting for the crossover of this level before taking fresh longs.

The benchmark, after touching a high of 8655 in the initial trade, slipped to end at 8590.

8670, the 61.8% retracement level of the entire 9119-7940 fall, continues to be important hurdle, a crossover of which required for fresh upmove. If that happens, next target to eye on the way up would be 8845, the top made in April.

On the way down, 8499, the bottom made this week, is the immediate support to eye.

Reliance Industries and Axis Bank will report their quarterly earnings today.