RBI POLICY IN FOCUS

RBI POLICY IN FOCUS

 

WORLD MARKETS

 

Dow climbed 1.4% while S & P 500 and Nasdaq rose 0.6% and 0.5% respectively on the back of strong Disney earnings and coronavirus vaccine hopes. The Nasdaq briefly broke above 11,000 for the first time and posted a six-day winning streak while Dow and S & P 500 rose for the fourth straight day.

 

Disney shares surged 8.8% after reporting 8 cents per share earning as against expectation of a loss of 64 cents per share. Airline stocks rose after Senate Republicans said they supported an additional $25 billion in federal aid for the industry.

 

Novavax reported phase one vaccine trial results that showed a positive immune response among patients. Johnson & Johnson announced it struck a $1 billion deal with the U.S. government to manufacture 100 million doses of its coronavirus vaccine candidate if it proves successful.

 

ADP reported that private payrolls in the U.S. increased by just 167,000 in July, well below estimate of 1 million and represents a tumble from the 4.314 million added in June. Institute for Supply Management’s non-manufacturing PMI came in at 58.1, beating the expected print of 55.

 

Brent crude rose 70 cents, or 1.6%, to $45.13 a barrel while WTI settled 49 cents, or 1.2%, higher at $42.19 per barrel.

 

European markets gained 0.5%-1.1%. July’s final euro zone PMI came in at a modest 56.5, with the services sector showing a weaker rebound than expected.

 

AT HOME

 

After rising more than a percent in the initial trade, benchmark indices fell sharply to end little changed. Sensex settled at 37663, down 34 points while Nifty added 24 points to finish at 11120. BSE mid-cap and small-cap indices gained 0.4% and 0.8% respectively. BSE Metal index soared 4%, becoming top gainer among the sectoral indices, followed by 1.9% higher Auto index. Energy and Power indices were the top losers, down 0.9% and 0.5% respectively.

 

FIIs net sold stocks, index futures and stock futures worth Rs 60 cr, 528 cr and 367 cr respectively. DIIs were net sellers to the tune of Rs 426 cr.

 

Rupee appreciated 11 paise to end at 74.94/$.

 

India's Nikkei/IHS Markit July services PMI improved to 34.2 from 33.7 in June. Composite PMI however fell to 37.2 from 37.8.

 

OUTLOOK

 

Today morning, Nikkei is up 0.3% while Hang Seng and Shanghai are modestly lower. SGX Nifty is suggesting a marginally higher start for our market.

 

In yesterday's report we had said that upon crossover of 11112, 11190, the 67% retracement level of the recent 11341-10882 fall, would be the next target/hurdle.

 

Nifty opened above 11112 and surged all the way to 11225, but slipped from there to end at 11120.

 

11225, the top made yesterday, is the immediate hurdle to eye, upon crossover of which, 11341, the top made last week, would be the next major target/resistance.

 

11053 followed by 10995, the 50% and 67% retracement level of the 10882-11225 upmove seen from the bottom made on Monday, are the support levels.

 

RBI's Monetary Policy Committee (MPC) will announce the outcome of its three-day meeting today. While the street is divided over the the possibility of a 25 bps repo rate cuts, market would watch out for any announcement on one time restructuring.

 

Lupin, Vodafone Idea and Pidilite will report their quarterly earnings today.