“BREXIT” OR “BREMAIN”?

“BREXIT” OR “BREMAIN”?

WORLD MARKETS                             

US indices ended with cuts of 0.2%-0.3% ahead of the U.K. vote on whether to leave the European Union (EU).

Energy stocks fell the most as US oil eased 1.4% to $49.13 and Brent too declined 1.5% to $49.88 after data from Energy Information Administration showed U.S. crude oil stocks declined a smaller-than-expected 917,000 barrels.

Pound briefly erased earlier gains against the U.S. dollar to trade near $1.470. A poll released yesterday from TNS indicated support for "leave" holding over "remain,"

Fed Chair Yellen, speaking before the House Financial Services Committee, said she believes the recent weakness in job creation is "transitory" and was optimistic on overall growth.

US existing home sales rose 1.8% in May to an annual rate of 5.53 million units, the highest level since February 2007.

European markets, except a 0.6% lower Italy, gained 0.3%-0.6%.

AT HOME

Benchmark indices ended lower by a fifth of a percent after a choppy trading session, extending the fall to second consecutive day. Sensex lost 47 points to settle at 26766 while Nifty finished at 8204, down 16 points. BSE mid-cap and small-cap indices lost 0.1% and 0.6% respectively. BSE Industrial and Auto indices fell 0.8% each, becoming top losers among the sectoral indices while Healthcare and Realty indices gained 0.4% and 0.2% respectively.

FIIs net sold stocks and index futures worth Rs 41 cr and 497 cr respectively but net bought stock futures worth Rs 348 cr DIIs were net buyers to the tune of Rs 361 cr.

Rupee appreciated 1 paise to end at 67.48/$.

Government yesterday cleared sale of spectrum in seven frequencies estimated to be worth about Rs 5.6 lakh crore. The auction will help operators augment expansion of high-speed 4G voice and data services.

Government also announced a Rs6,000-crore package for the textiles and apparels sector to help it garner a bigger share of the global market. The package also provides the sector more flexible labour laws and financial incentives. It hopes the package will create one crore new jobs in three years, attract Rs74,000 crore in investment and generate $30 billion in exports earnings.

The Union Cabinet today approved the norms for the next round of spectrum auctions and a new textiles policy to push manufacturing and exports, besides extending the scheme to assist debt-ridden power distribution companies in the state sector.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a marginally higher start for our market.

For past two weeks, Nifty has been consolidating between 8295 and 8064 and as we have been advising keeping trading volumes low keeping in mind looming "Brexit" vote.

The big day is finally here. UK will vote today to decide whether it wants to remain in the European Union or not. The results are expected to start coming in around our market opening tomorrow.

Depending on the outcome, a big gap up or down is not ruled out. If 8295 is decisively taken out next major target to eye would be 8655, which is the 52-week high made in last July.

On the way down 8064, the bottom made last week, which roughly coincides with the 34-DMA placed around 8050, is the important immediate support to eye, upon breach of which 7980 would be the next support but a further fall towards 7725, the 34-week moving average, cannot be ruled out.

Traders would do well to keep trading positions hedged or play through options route than futures. Investors can buy Nifty puts or sell higher strike calls for hedging the portfolio.