NIFTY SET TO PLUNGE ON MAURITIUS TREATY AMENDMENT; 7770 IS THE IMMEDIATE SUPPORT

NIFTY SET TO PLUNGE ON MAURITIUS TREATY AMENDMENT; 7770 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices, supported by gains in oil and weakness in oil, soared a percent and fourth yesterday.

Nymex oil climbed $1.22 or 2.8% to $44.66 a barrel amid supply disruptions and outages in Canada and Nigeria and expectations that the build-up in U.S. crude inventories will be lower than expected. Brent soared 4.3% to $45.52.

Yen weakened against the dollar to around 109.3 after Japanese Finance Minister said the government will intervene in the currency market if "one-sided" yen rises last long enough to hurt the economy. Dollar index rose 0.17% for its first six-day win streak since the one in April 2015.

US wholesale inventories were up 0.1% in March, in-line with expectations. The Job Openings and Labor Turnover Summary (JOLTS) report showed a rise in job openings to 5.8 million in March, while the hiring rate edged down to 3.7%. Small business optimism index rose for the first time this year, up 1.0 point from a two-year low in March to 93.6 in April.

In China, rebar, or reinforced steel, plunged 7.6% for its biggest intraday fall in seven years on renewed worries about demand. Iron ore lost 6%.

European markets, helped by some positive earnings and a sharp uptick in commodity stocks and prices, gained 0.4%-1.4%. 

Earlier China's CPI rose 2.3% y-o-y for a third-straight month in April, helped primarily by a spike in food prices. PPI fell 3.4%, improving from March's 4.3% fall.

AT HOME

After falling about a third of a percent in the morning trade, benchmark indices climbed about two third of a percent from the bottom of the day in the noon to end higher by about a third of a percent, extending the winning streak to second day. Sensex settled at 25773, up 84 points while Nifty added 22 points to finish at 7888. BSE mid-cap and small-cap indices gained 0.2% and 0.1% respectively. BSE Capital Goods index climbed 1.5% to become top gainer among the sectoral indices, followed by 0.7% rise in Consumer Durable index. Metal and Auto indices were the top losers, down 1.2% and 0.9% respectively.

FIIs net bought stocks worth Rs 329 cr but net sold index futures and stock futures worth Rs 378 cr and 732 cr respectively. DIIs were net buyers to the tune of Rs 68 cr.

Rupee depreciated 9 paise to end at 66.67/$.

ZEE Entertainment reported 13% growth in Jan-March quarter net profit at Rs 261 cr. Total income rose 13% to Rs 1532 cr. Ad revenue growth at 29% and EBIDTA margin at 27% were better-than-expectation.

In an important development, government yesterday said it had signed an amended bilateral tax treaty with Mauritius which would help prevention of fiscal evasion by giving it right to levy taxes on income and capital gains. According to this, for capital gains arising during April 1, 2017 to March 31, 2019, investors will get a benefit of 50% reduction in tax rate in India. However, from FY20, taxation at fulll domestic rate in India will take place. The government also said it will sign similar treaty with Singapore.

OUTLOOK

Today morning Asian markets are trading mixed with changes of upto half a percent and SGX Nifty is suggesting about 110 points lower opening for our market.

Ever since Nifty took out immediate hurdle of 7780 on Monday, we have been working with the upside target of 7990, which is the top made in April. The benchmark has since then moved up and yesterday closed at 7888 after touching a high of 7897.

However, a big gap down opening would take the benchmark below 7800. 7770 is the immediate support, a sustained trading below which will generate a sell on the hourly chart and would pave the way for further correction. 7678, the low made last week, would be the next target in that case.

Kotak Mahindra Bank and Asian Paints will report their quarterly earnings today.