8590-8711 IS THE IMMEDIATE RANGE; GST IN FOCUS

8590-8711 IS THE IMMEDIATE RANGE; GST IN FOCUS

WORLD MARKETS                             

US indices fell 0.5%-0.9% with the Dow extending the losing streak to seventh day as the continuous weakness in oil weighed on the sentiment.

US oil reversed earlier gains to end 1.4% lower at $39.51 a barrel amid oversupply concerns.

Personal income rose 0.2% in June, just below expectations, while personal consumer spending rose 0.4%, beating estimates.

Dollar index fell more than half a percent to 95.10. Gold gained $13 to $1373 an ounce.

European markets tumbled 0.7%-2.8% on continued concerns over the health of the banking sector.

Earlier Nikkei fell 1.5% as the yen soared to a three-week high versus the dollar after the $132 bn stimulus announced by the government fell short of expectation.

AT HOME

It was yet another day of weakness as benchmark indices, after gaining more than half a percent in the initial trade, fell about three fourth of a percent from the top of the day to end modestly lower. Sensex settled at 27982, down 21 points while Nifty lost 14 points to finish at 8623. BSE mid-cap and small-cap indices lost 0.6% and 0.8% respectively. Nifty FMCG index soared 2.3%, becoming top gainer among sectoral indices, followed by 0.7% rise in PSU Bank index. Metal and Realty were the top losers, down 1.9% and 1.2% respectively.

FIIs net bought stocks and index futures worth Rs 536 cr and 4 cr respectively but net sold stock futures worth Rs 841 cr. DIIs were net sellers to the tune of Rs 383 cr.

Rupee appreciated 1 paise to end at 66.73/$.

OUTLOOK

Today morning, except a marginally higher Shanghai, other Asian markets are trading with cuts of 0.7%-1.5% and SGX Nifty is suggesting about 30 points lower start for our market.

In yesterday's report we had mentioned that 8590, the low made on Monday, which also coincided with the previous resistance area, was the immediate support on the hourly chart a breach of which would open up the possibility of further correction. The benchmark fell 14 points to end at 8623 and a lower start today would take the benchmark close to 8590 support.

If 8590 does not sustain, next support area to watch out would be 8475-8490, where previous bottoms on daily chart are placed. 8711, the top made on Monday, is the immediate hurdle, upon crossover of which 8845 would be the next major target to eye.

India's most awaited tax-reform, GST, is just one step away from reality as the Rajya Sabha will take up the GST Constitutional Amendment Bill for discussion and passage today and with the government bringing in some amendments on key contentious issues, the chances of the passage of the same look bright. GST is a single unified tax on goods and services to be paid by the consumer and will replace multiple taxes levied at centre and state level. It is expected to reduce the end cost of the product and ensure uniform taxation across states and also make the system transparent. GST is also expected to reduce tax evasion and distorted allocation of resources.

Broadly, GST will be positive for manufacturing and negative for services. The sectors which are expected to be positively impacted are Auto, Cement, Logistics, Consumer staples, Media, Consumer Durables while negatively impacted sectors include telecom services, branded garments and tobacco.

HCL Tech will report its quarterly earnings today.