9300 IS THE IMPORTANT SUPPORT; 9450 IMMEDIATE HURDLE

9300 IS THE IMPORTANT SUPPORT; 9450 IMMEDIATE HURDLE

WORLD MARKETS                             

US indices gained 0.2%-0.4% after minutes of the U.S. Federal Reserve May meeting indicated an unwinding of its balance sheet likely towards year-end. S & P 500 posted a record close and both Dow and S & P 500 closed above their May 16 closing levels, wiping out losses from the biggest sell-off of the year.

Minutes indicated that the Fed could use a system where cap limits are implemented on how much the Fed would roll off every month without reinvesting. The central bank's balance sheet is currently worth $4.5 trillion.

While the Fed signaled that interest rates could be raised soon, FOMC members also indicated in the minutes that "it would be prudent" to wait for more evidence that reflected the softer economic data out of the U.S. recently was transitory.

Treasury yield fell after the minutes' release, with the 10-year yield at 2.257% and two-year yield at 1.281%. Dollar index fell about 0.25% to 97.10.

Total mortgage application volume increased 4.4% last week on a seasonally adjusted basis from the previous week thanks largely to refinancings. Existing home sales slipped 2.3% in April, more than expected.

WTI oil gained 0.3% to $51.53 and Brent added 0.4% to $54.16 ahead of highly-anticipated OPEC meeting in Vienna where major oil producers are expected to extend, and potentially deepen, output cuts in a bid to rebalance bloated oil markets.

European markets, except a 0.4% higher FTSE, fell 0.1%-0.2%.

AT HOME

Repeating pattern of past couple of days, benchmark indices, after gaining about half a percent in morning session, plunged sharply in noon to end lower by about a fourth of a percent. Sensex lost 64 points to settle at 30302 while Nifty finished at 9361, down 26 points. Broader market continued to bleed with BSE mid-cap and small-cap indices down 1.4% each. Except a 0.5% and 0.1% higher Oil & Gas and Auto indices respectively, all the BSE sectoral indices ended in red with Capital Goods and Telecom indices leading the fall, down 2.6% and 2.3% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 82 cr, 231 cr and 1287 cr respectively. DIIs were net buyers to the tune of Rs 197 cr.

Rupee appreciated 16 paise to end at 64.73/$.

Lupin posted 49.2% dip in March quarter at Rs 380 cr on account of drop in US sales and a one-time provisioning of Rs 156 cr on account of patent litigation over generic oral contraceptive drug in Australia. Revenue rose 1.3% to Rs 4253 cr. EBIDTA margin stood at 19.9%, below expectation of 24-27%.

Union Cabinet today cleared seven decisions including abolition of 25-year old Foreign Investment Promotion Board (FIPB) and Strategic Partnership for defence manufacturing. Other decisions include-Approval to Make in India preference in government procurements, hike in sugarcane fair price by Rs 25 per quintal to Rs 255 per quintal for 2017-18, approving 29.7-km long Noida-Greater Noida Metro rail corridor, which will be build at a cost of Rs 5,503 crore, approving Amendment to Central Road Fund Act, 2000, which states that 2.5% of the fund will go for the development and maintenance of National Waterways and finally AIIMS in the Assam at a cost of Rs 1,123 crore.

OUTLOOK

Today morning, except a marginally lower Shanghai, other Asian markets are trading with gains of 0.3%-0.5% and SGX Nifty is suggesting about 35 points higher start for our market.

Readers would recall that after Nifty broke the immediate support of 9430, we have been working with downside target of 20-DMA and 34-DMA. Nifty tested 20-DMA placed around 9380 on Tuesday and went ahead to touch a low of 9341 yesterday, moving towards 34-DMA target.

34-DMA, placed around 9300, continues to be important short term support to eye. On the way up, a trendline adjoining recent tops on the hourly chart presents a resistance around 9450 above which 9530, the top made last week, would be the bigger hurdle to eye.

Ashok Leyland, Britannia, IOC and Cipla will report their quarterly earnings today.