NIFTY EASES AFTER NEGATIVE DIVERGENCE AS EXPECTED; 8475 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY EASES AFTER NEGATIVE DIVERGENCE AS EXPECTED; 8475 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices gained 0.1%-0.5% yesterday with the Dow and S & P closing at fresh record highs.

Following Citigroup and JPMorgan Chase last week, Bank of America was the third big US financial institution to top second-quarter profit forecasts, reporting earnings per share of 36 cents versus an expected 33 cents yesterday. IBM beat expectations with earnings per share of $2.95 versus estimates of $2.89. Netflix reported better-than-expected earnings but subscriber numbers missed the company's own guidance

WTI crude fell 71 cents to $45.24/bbl and Brent settled down 1.4% at $46.96.

On the data front, U.S. homebuilder sentiment fell 1 point in July.

European markets ended mixed with modest changes. British semiconductor giant ARM soared 41% after Softbank announced that it would pay £17 per share for ARM Holdings, a 43% premium on Friday's closing price, in an all-cash deal.

The British pound rose half a percent to $1.33 after Bank of England policy member Martin Weale said he was unsure about the need for an interest rate cut in August.

AT HOME

After gaining about half a percent in the first half, benchmark indices tumbled just under a percent from the top of the day in last half to end lower by about a third of a percent. Sensex lost 90 points to settle at 27747 while Nifty finished at 8509, down 33 points. Except a 0.4% and 0.3% rise in BSE Auto and IT indices respectively, all the sectoral indices ended in red with Telecom index leading the tally, down 3.2%, followed by 1.6% cut in Oil & Gas index.

FIIs net bought stocks and index futures worth Rs 599 cr and 807 cr respectively but net sold stock futures worth Rs 393 cr. DIIs were net sellers to the tune of Rs 439 cr.

Rupee depreciated 14 paise to end at 67.20/$.

HUL reported in-line with estimated profit growth but disappointed on top line and volume front. Net profit rose 9.8% to Rs 1174 cr and income rose 3% to Rs 8128 cr. Volume growth stood at 4%.

OUTLOOK

Today morning, except a modestly higher Nikkei, other Asian markets are trading with cuts of upto 0.7% and SGX Nifty is suggesting about 15 points higher start for our market.

In our weekly report we had mentioned that Nifty has formed a negative divergence on hourly chart after a steep run-up and a consolidation/correction in the short term can't be ruled out.

Yesterday, the benchmark, after touching a high of 8587 in the first half, slipped later to end at 8509, vindicating this view.

8475 continues to be immediate support on the hourly chart, a breach of which will generate a sell on the hourly chart and next support to eye in that case would be 8400, which is the 61.8% retracement level of the last 8284-8595 upmove.

8595, the top made last week, should be seen as the immediate hurdle now, a crossover of which would be required for fresh upmove.

Wipro and Ultratech Cement will report their quarterly earnings today.