IT’S BIG RISK-OFF AS LEAVE CAMP LEADS

IT’S BIG RISK-OFF AS LEAVE CAMP LEADS

WORLD MARKETS                             

US indices soared 1.3%-1.6% following increased expectations the U.K. will vote to remain in the European Union.

The pound traded near $1.490, its highest since December. Dollar index fell about 0.4%.

US weekly jobless claims fell to 259,000. The flash Markit manufacturing PMI for June was 51.4, up from 50.7 in May.

New home sales declined 6% in May to 551,000 units.

US crude rose 98 cents or 2% to $50.11 a barrel. Gold fell $7 to $1263 an ounce.

European markets climbed 1.2%-3.7%.

AT HOME

After a lackluster morning trade, benchmark indices spiked up post European markets opening to end with gains of about eight tenth of a percent, breaking two-day losing streak. Sensex added 237 points to settle at 27002 while Nifty finished at 8270, up 67 points. BSE mid-cap index rose 0.3% while the small-cap index ended a tad lower. BSE Bankex climbed 1.6%, becoming top gainer among the sectoral indices, followed by 1.1% rise in Finance index. Realty index was the top loser, down 1.1%, followed by half a percent lower Telecom index.

FIIs net bought stocks, index futures and stock futures worth Rs 82 cr, 320 cr and 362 cr respectively. DIIs were net buyers to the tune of Rs 204 cr.

Rupee appreciated 22 paise to end at 67.25/$.

Weather officials yesterday said that monsoon rains were 7% below average in the week ending June 22, narrowing the deficit since the season started on June 8.

OUTLOOK

The counting of the crucial UK referendum is going on. As per the latest results, leave camp is leading with 51.55% vote while remain camp is at 48.45%.

Reacting to this pound is down nearly 7% at 1.38, Asian markets are trading with cuts of 0.5%-2.5% with Nikkei leading the tally, FTSE futures are down nearly 5%, US futures are down 2%-2.5% and SGX Nifty is suggesting about 200 points lower start for our market. Safe haven assets are surging with gold up nearly 2% and Yen hitting 100 against the dollar.

After today's gap down opening, Nifty would be closer to the lower level of the 8295-8064 range which it has been stuck over past 12 sessions. 8064 is also the level where 34-DMA is also placed which makes it important support to eye. 7980, the erstwhile resistance, would be the next support if 8064 is taken out but one can not rule out the possibility of the fall all the way to 7726, where 34-week moving average as well as 200-DMA are placed.

We, in the run up to the Brexit vote, have been advising trading volumes low and in yesterday's report had advised hedging trading positions and portfolios. Those hedges should help in today's fall.

Traders would do well to wait for the breach of 8064 for taking fresh bearish bets.