NIFTY TESTS CRUCIAL 8580-8540 SUPPORT; 8630 IS THE IMMEDIATE HURDLE

NIFTY TESTS CRUCIAL 8580-8540 SUPPORT; 8630 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

Dow and S & P 500 fell 0.3% and 0.2% while Nasdaq gained 0.1% on Friday, digesting remarks made by Federal Reserve Chair Janet Yellen and Vice Chairman Stanley Fischer.

Yellen, at the central bank's annual Jackson Hole summit, said the solid performance in the U.S. labor market and outlook for economic activity and inflation had strengthened the case in recent months for an increase in the federal funds rate. Vice Chairman Fischer said "two rate hikes were possible".

The second read on second-quarter U.S. GDP showed growth of 1.1%, down from the initial read of 1.2%. August consumer sentiment fell slightly.

U.S. Treasuries fell, with the two-year note yield higher at 0.84% and the benchmark 10-year yield at 1.62% percent. Dollar index rose 0.8% to 95.48.

US oil rose 0.6% to $47.64 a barrel.

European markets added 0.3%-0.8%.

For the week, US indices fell between 0.4%-0.8%. Europe wad mixed with FTSE down 0.3% but CAC and DAX up 0.9% and 0.4% respectively. In Asia, Shanghai and Nikkei fell 1.2% and 1.1% respectively. Hang Seng was off 0.1%. 

Bank of Japan Governor said on Saturday at Jackson Hole that the central bank would approve further monetary easing without hesitation, after the previous week's consumer prices data showed a dip in inflation.

AT HOME

After a weak finish to the August derivative series, it was a weak start for the September series too as benchmark indices, after gaining about a third of a percent in the initial trade, slipped about six tenth of a percent from the top of the day to end lower by about a fifth of a percent on Friday. Sensex lost 54 points to settle at 27782 while Nifty finished at 8572, down 20 points. BSE mid-cap index managed to gain 0.2% while the small-cap index lost 0.1%. BSE IT, Capital Goods and Realty indices fell 1.2% each, becoming top losers among the sectoral indices while Consumer Durable index climbed 1.5%, becoming top gainer, followed by 0.6% rise in Auto index.

FIIs net bought stocks and index futures worth Rs 341 cr and 1051 cr respectively but net sold stock futures worth Rs 153 cr. DIIs were net sellers to the tune of Rs 266 cr.

Rupee depreciated 1 paise to end at 67.06/$.

For the week, Sensex and Nifty lost 1% and 1.1% respectively, with Nifty extending the losing streak to third straight week.

Tata Motors, stripped-off forex loss, reported better-than-expected results both on consolidated and standalone front. Consolidated net profit fell 57% y-o-y to Rs 2236 cr while revenue was up 9% at Rs 67056 cr. Consolidated EBIDTA was down 31% y-o-y at Rs 7613 cr and margins stood at 11.4% as against 17.9%. More importantly, while reported EBIDTA margin for JLR was 12.3%, adjusted for forex losses of 207 mn pounds, margin stood at 14% which was in-line with estimates. Chinese JV also posted steady profit q-o-q.

OUTLOOK

Today morning, Nikkei, buoyed by hopes of further stimulus and weakness in Yen, is up more than 2% but other Asian markets are trading with cuts of 0.3%-0.6% and SGX Nifty is suggesting about 20 points lower start for our market.

For past couple of weeks we have been mentioning that Nifty, after a steep run-up of about 10% between June end to July period, is in a consolidation mode and 8700-8730 is the supply area while 8580-8540 is the floor of this consolidation.

Nifty, after touching a low of 8547 on Friday, recovered somewhat to close at 8572, testing the lower range of the trading range mentioned above. The benchmark however ended below the 34-DMA for the first time since 34th May.

8540, where the lower band of bollinger on daily chart is placed, is the final hope for the bulls, a decisive breach of which will turn the outlook negative for the near term and would pave the way for the larger retracement of the 7927-8728 upmove. 8420, the 38.2% retracement level of this upmove, would be the first downside target if that happens. 8630, the 20 DMA, is the immediate hurdle above which 8730 would be the major resistance to eye.

DLF and IOC will report their quarterly earnings today.