HERE COME 8670

HERE COME 8670

WORLD MARKETS                             

Dow and S & P 500 gained 0.4% and 0.8% respectively while Nasdaq surged 1.3% yesterday with the Nasdaq closing at record high, on the back of encouraging earnings and progress towards near-term resolution in the Greek debt crisis.

Netflix surged more than 18% at an all-time high after reporting solid subscriber growth that topped expectations. Intel closed 0.70% higher after initially jumping 2% on an earnings report that beat on both the top and bottom lines. Citigroup delivered quarterly results that topped expectations on both the top and bottom lines, for the largest quarterly profit in 8 years. Goldman Sachs posted quarterly earnings that fell sharply from the previous year, hit by a large litigation charge.

The NAHB survey showed U.S. homebuilder sentiment hit a 10-year high in July. U.S. weekly jobless claims came in at 281,000, better than the 285,000 estimate. On the flip side, the Philadelphia Fed survey came in at 5.7 for July, off June's 15.2 read.

European markets gained 0.6%-1.7% amid news that European Central Bank President Mario Draghi confirmed an increase in emergency funding to Greece by 900 million euros over one week. He added the ECB would "grant in principle a 3-year ESM stability support to Greece, subject to the completion of relevant national procedures."

Following the central bank relief announcement, a senior Greek official confirmed that banks would reopen on Monday.

European Union finance ministers also approved 7 billion euros in bridging loans to keep Greece afloat, allowing it to make a bond payment to the ECB next Monday and clear its arrears with the International Monetary Fund.

Nymex oil fell 50 cents at $50.91 a barrel. Gold fell $3.5 to $1144 an ounce.

AT HOME

Benchmark indices soared nearly a percent yesterday to close at three month high. Sensex surged 248 points to settle at 28446 while Nifty finished at 8608, up 84 points. BSE mid-cap and small-cap indices gained 1.3% and 0.8% respectively. All the BSE sectoral indices ended in green with Consumer Durable index and Bankex leading the tally, up 2.1% and 1.9% respectively.

FIIs bet bought stocks, index futures and stock futures worth Rs 746 cr, 1511 cr and 544 cr respectively. DIIs were net sellers to the tune of Rs 99 cr.

Rupee depreciated 10 paise to end at 63.50/$.

In a significant simplification of the foreign direct investment policy, the Union Cabinet yesterday approved a proposal to scrap the distinctions among different types of overseas investment by shifting to a single composite limit.

The new policy also means portfolio investment up to 49% will not need government approval or have to comply with sectoral conditions as long as it doesn't result in transfer of ownership and/or control of Indian entities to foreigners.

This will immediately benefit sectors such as multi-brand retail and pharmaceuticals that do not have sub-limits within the overall limit and will henceforth not need approval for increasing portfolio investment up to 49% of the total holding.

The Department of Industrial Policy and Promotion (DIPP) will issue a separate circular to clarify that even the sub-limits for FII investment in many sectors such as banking and defence will go. Till that happens, sectors such as banking, defence, credit rating, power exchanges and commodity exchanges. will continue to have that restriction.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 15 points higher opening for our market.

Readers would recall that we have been bullish on Nifty ever since immediate hurdle of 8440 was taken out on Monday. We were working with an immediate target of 8561, which was the top made last week, above which 8670, the 61.8% retracement level of the 9119-7940 fall, would be the next target, we had said.

The benchmark yesterday soared 84 points to end at 8608, achieving the 8561 target and moving towards 8670.

8670 continues to be next target above which 8845, the top made in April, would be the next major target to eye.

Immediate support on the hourly chart has moved up to 8470, with the stop loss of which long positions should be held on to. Some profit booking is advised closer to 8670.

ACC will report its quarterly earnings today.