US EQUITIES BREAK FIVE-DAY LOSING STREAK; FED IN FOCUS

US EQUITIES BREAK FIVE-DAY LOSING STREAK; FED IN FOCUS

WORLD MARKETS                             

US indices climbed 1%-1.2% yesterday, breaking a five-day losing streak, on the back of some recovery on oil prices and Chinese stocks, amid mixed earnings and the beginning of the two-day Fed meeting.

Nymex oil gained 59 cents or 1.24% to $47.98 a barrel, breaking four day losing streak.

Earlier, Shanghai Composite closed down 1.7% in a recovery from an intraday decline of as much as 5%. China's securities regulator yesterday said that it had launched an investigation into Monday's selloff, when stocks fell more than 8%.

In economic news, U.S. consumer confidence for July came in at 90.9, missing expectations and posting a decline from June's read of 99.8.  The Case-Shiller 20-city home price index rose 4.9% in May, matching April's pace but missing expectations for a 5.6% increase. The home ownership rate dropped to 63.4%, the lowest level since 1967. The Markit flash services PMI rose slightly from a five-month low, hitting 55.2 in July.

Ford closed up nearly 2% after the firm posted its best quarterly performance since 2000. UPS reported higher second-quarter net profit as improved margins offset a drop in revenue.

European markets gained between 0.8%-2.3% with Italy leading the tally.

AT HOME

Benchmark indices ended lower by nearly a third of a percent after a choppy trade, extending the losing streak to fourth straight day. Sensex settled at 27459, down 102 points while Nifty lost 24 points to finish at 8337. BSE mid-cap and small-cap indices lost 0.2% each. BSE Realty index nosedived 2.7%, becoming top loser among the sectoral indices, followed by 0.9% cut in Healthcare index. Capital Goods index and Bankex were the top gainers, up 0.5% and 0.4% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1376 cr, 120 cr and 407 cr respectively. DIIs were net buyers to the tune of Rs 665 cr.

Rupee appreciated 25 paise to end at 63.91/$.

Maruti reported 56.5% y-o-y jump in first quarter net profit at Rs 1193 cr. Revenue rose 18% to Rs 13425 cr. Profit was slightly below the forecast due to lower other income and higher tax cost while topline was in line. Operational performance was ahead of expectations. Operating margin expanded by 460 bps to 16.3%.

HDFC reported lower-than-expected 1.2% y-o-y rise in net profit at Rs 1316 cr. The numbers are not comparable on year-on-year basis due to delay in getting dividend income from HDFC Bank. Net interest income, the difference between interest earned and interest expended, jumped 16.8% y-o-y to Rs 2,038.5 crore during the quarter, which was slightly ahead of estimates. Net interest margin slipped 20 basis points q-o-q to 3.8%t from Rs 4% but remained unchanged on year-on-year basis.

PNB reported lower-than-expected net profit and NII but improved asset quality. Net Profit fell 48.7% to Rs 721 cr. NII fell 6.3% to Rs 4102 cr. Gross NPA ratio improved to 6.47% from 6.54% q-o-q and net NPA ratio stood at 4.05% as against 4.06%.

Both the houses of the Parliament were adjourned for two days to mourn the death of former President A.P.J. Abdul Kalam.

OUTLOOK

Today morning Asian markets are trading mixed with changes of upto half a percent and SGX Nifty is suggesting a flattish opening for our market.

In yesterday's report we had mentioned that after recent steep fall, Nifty was close to two important supports in the form of immediate previous bottom on the daily chart placed at 8315 and the lower band of bollinger on the daily chart placed around 8300. We therefore had advised booking profit in short positions as Nifty approaches 8315.

The benchmark, after touching a low of 8322, closed at 8337 in yesterday's trade.

We reiterate our view that 8315-8300 is the important support area and traders should wait for the breach of the same before taking fresh negative bet.

US Fed concludes its two-day meeting today. Markets would watch out the policy statement for further clues on the timing of interest rate increase.

Yes Bank will report its quarterly earnings today.