NIFTY SET TO CHALLENGE 8728 HURDLE; 8540 IMPORTANT SUPPORT

NIFTY SET TO CHALLENGE 8728 HURDLE; 8540 IMPORTANT SUPPORT

WORLD MARKETS                             

Dow and S & P 500 rose 0.3% each while Nasdaq climbed 0.6% yesterday on the back of rising oil prices and closed at fresh record high.

US oil rose 2.8% to $45.74 a barrel and Brent added 2.9% to settle at $48.35 after Russian Energy Minister said that his country was consulting with Saudi Arabia and other producers to achieve market stability.

Empire State Manufacturing survey index fell five points to -4.2. NAHB housing index showed homebuilder sentiment rose 2 points.

European markets, except a marginally lower CAC, ended with gains of upto 0.4%.

Earlier, Japan's Nikkei 225 fell 0.3% after its GDP data disappointed, while China's Shanghai composite rose more than 2% on stimulus hopes, following weaker-than-expected July data.

AT HOME

Bulls made a grand comeback before a long weekend as benchmark indices soared nearly a percent in Friday's trade. Sensex settled at 28152, up 283 points while Nifty climbed 80 points to finish at 8672. BSE mid-cap and small-cap indices gained 0.8% and 0.2% respectively. BSE Bankex and Finance indices were the top gainers among the sectoral indices, rising 2% and 1.8% respectively. Realty and IT indices fell about half a percent, becoming top losers.

FIIs net bought stocks and stock futures worth Rs 1204 cr and 613 cr respectively but net sold index futures worth Rs 174 cr. DIIs were net sellers to the tune of Rs 392 cr.

Rupee depreciated 5 paise to end at 66.89/$.

For the week Sensex gained 0.3% while Nifty lost 0.1%.

SBI met expectations on earnings front and surprise positively on asset quality front. Net profit fell 31.7% to Rs 2521 cr. NII rose 4.2% to Rs 14312 cr. Provision and contingencies dropped by 43.7% q-o-q to Rs 7413 cr. Fresh slippages stood at Rs 8790 cr, down sharply compared to Rs 30313 cr in preceding quarter. Gross NPA as a percentage of gross advances rose 44 bps q-o-q to 6.94% and net NPA 24 bps to 4.05%.

Hindalco bet expectation with net profit soaring 381% y-o-y to Rs 294 cr. Revenue fell 11.4% to Rs 7597 cr. Operating profit rose 35% to Rs 1232 cr and margin expanded by 560 bps to 16.2%.

Sun Pharma matched expectation as consolidated net profit rose 266% to Rs 2034 cr and total income rose 22% to Rs 8243 cr. Operating profit surged 65% to Rs 2921 cr and margin expanded by 930 bps to 35.4%.

Cipla disappointed with 44% fall in net profit at Rs 365 cr. Revenue fell 6.4% to Rs 3594 cr. Operating profit slipped 42% to Rs 611 cr and margin cracked 1050 bps to 17%.

July CPI rose at a faster-than-expected 6.07% rate, up from June's 5.77% level, on soaring food prices, marking the fourth straight reading above the RBI's target of 5% by March 2017.

Industrial production expanded 2.1% y-o-y in June, faster than a revised 1.1% rise in May.

RBS has cancelled its 5-year, $300 mn, contract with Infosys due to weak markets condition.

Oil marketing companies cut petrol and diesel price by Rs. 1 and Rs. 2 respectively.

OUTLOOK

Today morning, except a modestly lower Nikkei, other Asia markets are trading with modest gains and SGX Nifty is suggesting about 30 points higher start for our market.

In Friday's report we had mentioned that "8518-8500 is the important support area to eye where 8518 is the immediate previous bottom on the daily chart and 8500 is where 34-DMA is placed. 8650 is the immediate hurdle on the hourly chart abvoe which 8728, the top made on Tuesday, would be the next hurdle to eye."

Nifty soared 80 points to settle at 8672 and is set to open near 8700 today.

8728, the top made last week, continues to be immediate target to eye above which 8845, the top made in April 2015, continues to be major target on the anvil.

Traders would still do well to concentrate on individual stocks and stay light on Nifty as the current move will still be classified as consolidation after a big upmove and lacks momentum as of now. Positional traders can stay/trade long with the stop loss of 8540, which is the immediate previous bottom on the daily chart.