WORLD EQUITIES EASE ON ECB DISAPPOINTMENT; TRAIL STOP-LOSS TO 8870

WORLD EQUITIES EASE ON ECB DISAPPOINTMENT; TRAIL STOP-LOSS TO 8870

WORLD MARKETS                             

US indices fell 0.2%-0.5% yesterday, despite a surge in oil prices, as ECB decision to decision to stand pat on policy weighed on the sentiment.

The ECB kept its benchmark refinancing rate at 0 percent and also did not change its trillion-euro bond-buying plan, saying the program will run until the end of March 2017 or beyond if necessary.  It also lowered its growth and inflation forecasts for 2017 and 2018.

WTI crude soared 4.7% to $47.62 after the data from Energy Information Administration showed a drawdown of 14.5 million in weekly crude inventories. Brent rose $2.01 or 4.2% to $49.99.

US Dollar index, after touching a low of 94.45, reversed to close at 94.99, the previous finish being 94.96. Gold fell $8 to $1342 an ounce.

European markets closed mixed. While UK, Italy and Spain rose 0.2%, 0.5% and 1% respectively, Germany and France fell 0.7% and 0.3% respectively.

AT HOME

After starting marginally lower, benchmark indices saw a sustained northward move through the session to end higher by four tenth of a percent, with Sensex and Nifty closing at the highest level since 5th March 2015 and 3rd March 2015. Sensex added 119 points to settle at 29045 while Nifty finished at 8952, up 35 points. BSE mid-cap and small-cap indices rose 0.2% and 0.8% respectively. BSE Realty and Healthcare indices soared 3% and 2.2% respectively, becoming top gainers among the sectoral indices while IT and Teck indices tumbled 2.5% and 1.8% respectively, becoming top losers.

FIIs net bought stocks worth Rs 111 cr but net sold index futures and stock futures worth Rs 56 cr and 951 cr respectively. DIIs were net sellers to the tune of Rs 587 cr.

Rupee depreciated 4 paise to end at 66.41/$.

GST Bill is now a low as the President Mukherjee yesterday approved it. The move paves the way for setting up of a GST Council that will make recommendations on a model GST Bill, rates and other important aspects before the new indirect tax regime rolls out.

TCS fell after the company said that it is seeing some sequential loss of momentum in Banking and Financial Services Solution (BFSI) business in US and customers are holding back discretionary spending.

Yes Bank tumbled after it launched a qualified institutional placement (QIP) issue to raise $1 billion to help it expand its capital base. The bank however deferred the issue later in the evening.

OUTLOOK

China's August CPI has come in at 1.3% y-o-y, missing expectations for a 1.6% rise.  Producer price index (PPI) is down 0.8%.

Except a 0.4% higher Hang Seng and flat Shanghai, other Asian markets are trading with cuts ranging from 0.1%-1.2% with Korea leading the losses after reports indicated an earthquake in North Korea was caused by an explosion, possibly from a nuclear test. SGX Nifty is suggesting about 25 points lower start for our market.

As readers would recall, we had initiated a buy call on Nifty after 8730 hurdle was taken out and have been advising holding on to long positions with a trailing stop-loss. Yesterday, the benchmark, after touching a high of 8960, settled at 8952, which is the highest close since 3rd March 2015.

While 9119, the highest high made in March 2015, is the target we are working with, it is only logical that some sort of profit booking/caution/nervousness creeps in after a steep run-up and as the big 9000 figure approaches.

Traders would do well to book some profit in longs and raise stop-loss in remaining positions to 8870, which is now the immediate support on the hourly chart.

IIP for July will be released today and is expected to show a growth of 1.3%, down from 2.1% print in June.