DOLLAR HITS ONE AND HALF MONTH HIGH ON RATE HIKE FEARS; 7770 CONTINUES TO BE IMMEDIATE SUPPORT FOR NIFTY

DOLLAR HITS ONE AND HALF MONTH HIGH ON RATE HIKE FEARS; 7770 CONTINUES TO BE IMMEDIATE SUPPORT FOR NIFTY

WORLD MARKETS                             

Dow and S & P 500 ended flat while Nasdaq gained half a percent. All 3-indices however finished off-the day high after the Federal Reserve's April meeting minutes said a June rate hike was likely if the data improves.

The Federal Open Market Committee's April meeting minutes said, "Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

Dollar index gained more than half a percent to 95.19, its highest since late March. Commodities, especially copper took a hit on stronger dollar.

US oil fell 12 centss to $48.19 a barrel. EIA's weekly inventory data showed a 1.3 million barrel build in crude, while other fuel stockpiles declined.

European markets, except a marginally lower FTSE, gained 0.5%-1.2% with Italy on the top.

AT HOME

After falling a percent in the morning trade, benchmark indices recouped most of the losses in the noon trade to end lower by a fourth of a percent. Sensex lost 69 points to settle at 25705 while Nifty ended at 7870, down 21 points. BSE mid-cap index ended flat while small-cap index gained 0.2%. BSE Realty index climbed 2.1%, becoming top gainer among the sectoral indices, followed by 0.6% rise in Capital Goods index. Auto and Consumer Discretionary indices were the top losers, down 1.3% and 0.7% respectively.

FIIs net sold stocks, index future and stock futures worth Rs 251 cr and 1282 cr respectively but net bought stock futures worth Rs 285 cr. DIIs were net buyers to the tune of Rs 240 cr.

Rupee depreciated 10 paise to end at 66.97/$.

OUTLOOK

Today morning, except a modestly higher Nikkei and Shanghai, other Asian markets are trading with cuts of upto a percent with Hang Seng leading the losses and SGX Nifty is suggesting about 40 points lower opening for our market.

In yesterday's report we had mentioned that 7990-7770 continues to be broad range for Nifty, a decisive breach of which on either side is required for taking a fresh directional view.

Yesterday, the benchmark, after touching a low of 7810, rebounded to close at 7870 but is set to open lower today.

7770 continues to be immediate support, a breach of which will generate a sell on the hourly chart and 7680, the bottom made in early May, would be the next target in that case.

Counting for the elections held in Kerala, West Bengal, Assam, Tamil Nadu and Puducherry will be held today.

SEBI, in its board meeting today, is expected to consider stringent rules for P-Notes as part of efforts to check the flow of black money into stock market.

Lupin will report its quarterly earnings today.