NIFTY RETREATS AFTER ACHIEVING 8700 TARGET; 8590 IS THE IMMEDIATE SUPPORT

NIFTY RETREATS AFTER ACHIEVING 8700 TARGET; 8590 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

Dow and S & P 500 fell 0.1% each while Nasdaq rose 0.4% yesterday with the Dow extending the losing streak to sixth session amidst weak oil prices. Nasdaq was supported by gains in Apple and Biotech shares.

On the data front, the ISM manufacturing index came in at 52.6, slightly below estimate of 53. The Markit PMI manufacturing index reading for July came in at 52.9. Construction spending for June declined 0.6%.

Energy was the top loser as oil fell 3.7% to $40.06 a barrel as increases in OPEC production and U.S. oil rig additions weighed on sentiment.

European markets fell upto 1.7% with Italy leading the losses, reacting to European banking stress tests while digesting new manufacturing data and corporate earnings from Europe. The U.K.'s manufacturing PMI touched more than 3-year low at 48.2 in July – down from 52.4 in June. Manufacturing growth in the euro zone edged lower in July, coming in at 52.0.

AT HOME

It was quite a volatile session of trade as benchmark indices, after gaining about eight tenth of a percent in first hour, plunged nearly a percent and half from the top of the day and then recouped some of the losses to end marginally lower. Sensex settled at 28003, down 49 points while Nifty lost 2 points to finish at 8636. BSE mid-cap and small-cap indices gained 0.4% and 0.1% respectively. BSE Capital Goods index plunged 2.3%, becoming top loser among the sectoral indices, followed by 1.2% cut in Bankex. BSE IT and Teck indices were the top gainers, up 1.8% and 1.5% respectively.

FIIs net bought stocks and index futures worth Rs 726 cr and 632 cr respectively but net sold stock futures worth Rs 975 cr. DIIs were net sellers to the tune of Rs 414 cr.

Rupee appreciated 27 paise to 66.74/$.

India's core sector grew at 5.2% in June, up from 2.8% in May.

Reports suggested that the GST Constitutional Amendment Bill is likely to be tabled on the floor of the Parliament on Wednesday.

Maruti reported a healthy 12.7% y-o-y growth in July sales at 1.37 lac units. Eicher Motors sold 31% more Royal Enfields at 40760 units. M & M sales grew by 14% to 39458 units. Escorts sold 17.6% more vehicles at 4035 units. Ashok Leyland however sold 5% less vehicles at 10492 units. Tata Motors sales were up 7.5% at 43160 unit. For Hero Motocorp, growth at 5.32 lac unit stood at 9.1% but was lowest for 2016 so far. TVS was good at 2.48 lac units, up 14%.

RBI released guidelines for 'On Tap' licensing of private sector universal banks. The guidelines state individuals with 10 years senior-level experience are eligible to promote a bank but large industry houses have been excluded as eligible entities, although they can invest up to 10%.

Tech Mahindra reported 9.5% dip in consolidated net profit at Rs 797 cr, which was better-than-expected while revenue growth, with 0.5% at Rs 6921 cr, was in-line. Dollar revenue at 1031.5 was up 0.87% and was in-line too. Operational performance however disappointed. EBIT was down 11.4% at Rs 827 cr and margin contracted 165 bps to 11.95%.

OUTLOOK

Today morning Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a marginally lower start for our market.

Nifty yesterday touched a high of 8711, achieving the 8700-8715 target area we have been working with since 8595 hurdle was taken out. The benchmark however retreated from there to touch a low of 8590 before closing at 8636.

8590, the low made yesterday, which also coincided with the previous resistance area, is the immediate support on the hourly chart a breach of which would open up the possibility of further correction. 8490-8475 would be the next support area if that happens.