NIFTY SET TO CHALLENGE 7820 HURDLE; KEY EARNINGS IN FOCUS

NIFTY SET TO CHALLENGE 7820 HURDLE; KEY EARNINGS IN FOCUS

WORLD MARKETS                             

US indices soared 1.2%-2% yesterday on the back of positive housing data and gains in European markets.

New home sales for April jumped 16.6% to 619,000 units, topping expectations and the highest level since January 2008

Dollar index rose nearly a third of a percent to 95.60, its highest in nearly two months. Euro fell to $1.114, its lowest since mid-March. Gold plunged $22 to $1229 an ounce.

Nymex oil rose 54 cents to $48.62 a barrel, its highest since October. Brent gained half a percent to $48.62 a barrel, marking the first settle below WTI since January. Data from the American Petroleum Institute showed U.S. crude inventories fell 5.1 million barrels last week, beating expectations.

European markets climbed 1.4%-3.3% on the back of euro weakness against the U.S. dollar, general improvement in European data, and a poll showing less support for the U.K. leaving the European Union. Germany's ZEW economic sentiment index fell unexpectedly in May to 6.4 from 11.2 in April.

AT HOME

After trading around the zero line in the morning trade, benchmark indices spiked up in the late noon trade to end higher by about a fourth of a percent, breaking four day losing streak. Sensex added 75 points to settle at 25305 while Nifty finished at 7749, up 18 points. BSE mid-cap and small-cap indices however lost 0.2% and 0.6% respectively. BSE Finance and Auto indices gained 0.4% and 0.3% respectively, becoming top gainers among the sectoral indices while Oil & Gas and Healthcare indices tumbled 1% and 0.9% respectively, becoming top losers.

FIIs net sold stocks and index futures worth Rs 816 cr and 373 cr respectively but net bought stock futures worth Rs 351 cr. DIIs were net buyers to the tune of Rs 990 cr.

Rupee depreciated 26 paise to end at 67.75/$, its lowest in 2-1/2 months.

Private weather forecaster Skymet yesterday upped its Indian monsson forecast to 109% of the long period average from 105% earlier.

Tech Mahindra beat estimates on bottomline front but revenue and EBIT were in-line. Dollar revenue was up 0.75% at USD 1023 mn q-o-q. Rupee revenue rose 2.7% to Rs 6884 cr and profit, driven by other income, forex gain and lower tax cost, jumped 18.2% to Rs 897 cr. EBIT fell 2% to Rs 944 cr and margin contracted by 65 bps to 13.7% which were slightly lower-than-expected.

Cipla, hit by lot of one-offs, reported 69% dip in net profit at Rs. 80 cr. Revenue rose 6% to Rs 3206 cr. Operating margins fell to 6.7% from 16.4% y-o-y. Adjusted margin stood at 15.8%.

OUTLOOK

Today morning Asian markets are trading with gains of 0.7%-2.3% with Hang Seng leading the tally and SGX Nifty is suggesting about 70 points higher opening for our market.

For past couple of sessions we have been working with downside target of 7680, which was the bottom made in early May.

Nifty, after touching a low of 7716 yesterday, rebounded to close at 7749 and a gap up opening today is expected to take it above 7800 mark.

7820, as mentioned in yesterday's report, continues to be immediate hurdle to eye on the way up, a sustained trading above which will trigger a buy on the hourly chart and would pave the way for the further upmove. 7940, the top made last week, would be the next target in that case.

Traders can square-off short positions and go long once the top made in first hour is taken out.

L & T, Bajaj Auto, Ashok Leyland and Tata Steel will report their quarterly earnings today.