COMMODITIES PLUNGE ON STRONG DOLLAR, CHINA WORRIES

COMMODITIES PLUNGE ON STRONG DOLLAR, CHINA WORRIES

WORLD MARKETS                             

After plunging more than a percent in the initial trade on the back of Greek crisis, Dow and S & P 500 shot up more than a percent and half from the bottom of the day to end higher by half a percent. Nasdaq ended 0.1% up.

Euro zone leaders held an emergency summit in Brussels to discuss Greece. Greece reportedly did not submit new written proposals on Tuesday, but instead made an oral presentation—with a written version to come on Wednesday, a move which irritated finance ministers who had traveled to discuss a new deal. The European Union later said all 28 of its heads of state will convene to discuss Greece's situation on Sunday.

European Council President Donald Tusk at a news conference said that Greece has time until the end of this week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc.

In U.S. economic data, May international trade numbers showed that the U.S. trade deficit widened, fueled by a drop in exports.

The IMF yesterday reiterated that the Federal Reserve should not raise interest rates until 2016.

Bond yields continued to fall, with the US 10-year yield below 2.2%, before trading around 2.26%. The dollar gained nearly 1%, while the euro hit a low of $1.0915, its lowest since June 2. Nymex oil settled 20 cents lower at $52.33 a barrel. Gold plunged $21 to $1153 an ounce.

European markets ended with steep cuts of 1.6%-3%. European banks came under renewed pressure over concerns about their exposure to Greece.

Strong dollar and China growth concerns weighed on commodities. Silver sank 5% to settle at $14.96, the lowest since August 2009. LME copper settled 4.5% lower after falling 6% to touch lowest level since July 2009. Nickel tumbled 9%. 

AT HOME

After gaining nearly half a percent in the opening trade, benchmark indices gave away all the gains and more through the session to end marginally lower. Sensex settled at 28172, down 37 points while Nifty lost 11 points to finish at 8511. BSE mid-cap and small-cap indices however gained 0.5% and 0.6% respectively. BSE Realty and Consumer Durable indices gained the most among the sectoral indices, rising 0.9% and 0.7% respectively. Teck and IT indices lost 0.5% and 0.4% respectively, becoming top losers.

FIIs net bought stocks and index futures worth Rs 24 cr and 957 cr respectively but net sold stock futures worth Rs 61 cr. DIIs were net sellers to the tune of Rs 95 cr.

Rupee depreciated 6 paise to end at 63.46/$.

OUTLOOK

Today morning Shanghai Composite and Hang Seng are down more than 4%, other Asian markets are lower by 0.5%-1.5% and SGX Nifty is suggesting about 70 points lower opening for our market.

In yesterday's report we had mentioned that having crossed the important 8490 hurdle, Nifty is headed to 8670, which is the 61.8% retracement level of the 9119-7940 fall and had advised holding on to trading longs with the stop loss of 8430, which was the immediate support on the hourly chart.

The benchmark, after touching a high of 8561, slipped to end at 8510 and is set to open with a downward gap today that will straight away take it closer to 8430 support. Below 8430, 8380, the 200-DMA, would be the next support to eye.

Traders are advised to cut long positions if Nifty breaks the low made in first hour of trade.