ALL EYES ON THE FED

 

ALL EYES ON THE FED

 

WORLD MARKETS

 

US indices fell 0.2%-0.7%, with Nadaq falling the most, ahead of the outcome of the Federal Reserve's policy meeting due Wednesday.

 

While the central bank is not expected to make any policy moves, markets will watch for comments on inflation and the Fed’s eventual tapering plans.

 

US 10-year Treasury yield was little changed at 1.496%. Dollar index too was flattish at 90.515. Spot gold fell 0.5% to $1,855.99 per ounce.

 

U.S. Producer Price Index rose 0.8% month-on-month in May, higher than the estimate of 0.5%. On an annual basis, growth was 6.6%, the largest 12-month increase on record since the data started in 2010. Retail sales fell 1.3% in May, greater than the expectation of a 0.6% dip.

 

Brent crude settled 1.65% higher at $72.12 per barrel while US oil advanced 1.75% to settle at $72.12 per barrel.

 

FTSE, DAX and CAC gained 0.4% each. German final harmonized inflation was 2.4% annually in May, while French final inflation came in at 1.8%.

 

AT HOME

 

Benchmark indices added four tenth of a percent each, extending the winning streak to fourth straight day and hitting fresh record highs. Sensex settled at 52773, up 221 points while Nifty added 57 points to finish at 15869. Nifty mid-cap and small-cap indices gained 0.6% and 0.4% respectively. BSE Realty and Consumer Discretionary Goods & Services indices rose 1.6% and 1% respectively, becoming top gainers among the sectoral indices while Healthcare and Power indices were the top losers, down 0.7% and 0.5% respectively.

 

FIIs net bought stocks and stock futures worth Rs 634 cr and 753 cr respectively but net sold index futures worth Rs 11 cr. DIIs were net sellers to the tune of Rs 649 cr.

 

Rupee depreciated 4 paise to end at 73.31/$.

 

India's trade deficit widened to $6.28 billion in May from $3.15 billion y-o-y. Exports rose 69.35% to $32.27 billion while imports were up 73.64% to $38.55 billion.

 

OUTLOOK

 

Today morning, Asian markets are trading with cuts of 0.2%-0.3% while SGX Nifty is suggesting around 40 points lower start for our market.

 

In yesterday's report we had said that 15900, where a rising trendline adjoining recent tops on the hourly chart was placed, was the upside target/resistance to eye.

 

Nifty, after touching a high of 15901, slipped to end at  15869.

 

Upon sustained trading above 15900, 16050 would be the next upside target to eye.

 

15567, the bottom made last week, continues to be important immediate support.