WORLD EQUITIES TUMBLE ON US INTEREST RATE HIKE FEARS; NIFTY HEADED TO 8730-8690 SUPPORT AREA AFTER BREAKING 8870 SUPPORT

WORLD EQUITIES TUMBLE ON US INTEREST RATE HIKE FEARS; NIFTY HEADED TO 8730-8690 SUPPORT AREA AFTER BREAKING 8870 SUPPORT

WORLD MARKETS                             

US indices nosedived 2.1%-2.5% on Friday, posting their biggest single day fall since June 24, on fears of a looming interest rate hike by the Federal Reserve.

Boston Fed President Eric Rosengren, in a speech, said that low interest rates are increasing the chance of overheating the U.S. economy. Gradually tightening monetary policy is appropriate to maintaining full employment. Dallas Fed President Rob Kaplan, a nonvoting member of the Fed's committee, said in another speech the case for a rate hike has strengthened in the past few months.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded more than 30% higher, near 16.4.

Oil prices tumbled nearly 4% with Brent down $1.98 at $48.01 and US crude down $1.74 to $45.88.

U.S. Treasuries fell with the two-year note yield near 0.79% and the benchmark 10-year note yield around 1.67%. The U.S. dollar index rose to 95.35 from 94.94.

European markets fell 0.8%-1.3%. Data from Germany showed exports fell 2.6% in July. Yields on 10-year German Bunds turned positive for the first time since June 22.

For the week, US indices fell 2.2%-2.4%, marking the worst week since January. In Europe, FTSE fell 1.7% while DAX and CAC were down around 1.1%. In Asia, Hang Seng climbed 3.6% while Nikkei and Shanghai added 0.2% and 0.4% respectively. WTI posted a weekly gain of more than 3%.

AT HOME

The week ended on a negative note as benchmark indices plunged nearly a percent, suffering the worst fall in a month. Sensex settled at 28797, down 248 points while Nifty lost 86 points to finish at 8867. BSE mid-cap and small-cap indices fell 1% and 0.5% respectively. BSE Metal and FMCG indices tumbled 1.8% each, becoming top losers among the sectoral indices while Oil & Gas and Energy indices added 0.9% each, becoming top gainers, followed by 0.4% rise in IT index.

FIIs net sold stocks, index futures and stock futures worth Rs 315 cr, 372 cr and 1643 cr respectively. DIIs were net sellers to the tune of Rs 328 cr.

Rupee depreciated 26 paise to end at 66.68/$.

For the week, Sensex and Nifty gained 0.9% and 0.6% respectively.

OUTLOOK

Today morning Asian markets are down 1%-2% and SGX Nifty is suggesting about 135 points lower start for our market.

In Friday's report we had suggested that "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." The benchmark plunged to 8859 before closing at 8867 on Friday, breaching this support.

A big gap down opening today would take Nifty close to 8730 mark today. Readers would recall that 8730 was the upper level of the erstwhile 8540-8730 consolidation phase and hence it should now act as the support on the way down. Below that you have 20 DMA and 34-DMA placed around 8720 and 8690 respectively, which makes 8730-8680 an important support area.

Traders would do well to keep volumes low and let the Nifty settle down before taking a fresh call.

IIP for July will be released today and is expected to show a growth of 1.37%, down from 2.1% growth registered in June. CPI for August will also be out today and is expected to cool down to 5.13% from July's 6.07% level.

Tata Steel will report its quarterly earnings today.

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.

NIFTY TAKES A BREATHER; STAY LONG WITH THE STOP-LOSS OF 8810

NIFTY TAKES A BREATHER; STAY LONG WITH THE STOP-LOSS OF 8810

WORLD MARKETS                             

Dow ended marginally in the red, S & P 500 was flat while Nasdaq rose 0.2% yesterday.

The Beige Book, a key indicator of the U.S. economic health and closely watched by the Federal Reserve, showed moderate wage growth in coming months.

U.S. crude rose 1.5% or $0.67 to $45.50 per barrel after American Petroleum Institute data showed the largest weekly stock declines in nationwide crude inventories in over 30 years. Brent added $0.72 to close at $47.98.

Dollar index rose to 94.96 from 94.90. Gold fell $5 to $1349 an ounce.

European markets gained 0.3%-1.4% with Italy on the top. German industrial output for July fell 1.5% month-on-month, its steepest monthly drop since August 2014.

Japan revised its second-quarter gross domestic product (GDP) up to 0.7 percent year-on-year, compared with the initial estimates of 0.2 percent.

AT HOME

It was consolidation time as benchmark indices ended modestly lower after a range bound but choppy trading session. Sensex lost 52 points to settle at 28926 while Nifty finished at 8918, down 25 points. BSE mid-cap index fell 0.1% but the small-cap index gained 0.4%. BSE Capital Goods and Metal indices climbed 1.2% and 1.1% respectively, becoming top gainers among the sectoral indices while Consumer Durables and Utilities were the top losers, down 1% and 0.9% respectively.

FIIs net bought stocks worth Rs 854 cr but net sold index futures and stock futures worth Rs 27 cr and 1015 cr respectively. DIIs were net sellers to the tune of Rs 769 cr.

Rupee closed at 66.37/$, appreciating 15 paise compared to previous close.

BHEL surged 15.7% after reporting better-than-expected June quarter results supported by good business in its power segment. Net profit jumped 54% to Rs 77.7 crore in April-June from Rs 50.4 crore in corresponding quarter last fiscal. Total income rose 29% at Rs 5622 crore against Rs 4368 crore in year-ago period. EBITDA also improved to Rs 71 crore versus EBITDA loss of Rs 183 crore while EBITDA margin was at 1.3%. 

ONGC reported 21% y-o-y drop in June quarter net profit at Rs 4233 cr as oil prices slumped and its output fell. Realisation stood at $46.10 per barrel as against $59.08. In rupee terms realisation per barrel was down 18% at Rs 3085. Also, the company got 34.33% lower gas price at USD 3.06 per million British thermal unit. Oil output dropped 2% to 6.01 million tons while gas production was 5.55% lower at 5.494 billion cubic meters.

GAIL reported 244% y-o-y jump in June quarter net profit at Rs 1335 cr, boosted by a turnaround in petrochemical business and sale of stake in Mahanagar Gas. PAT excluding MGL gain stood at Rs 846 cr, up 118% y-o-y.

OUTLOOK

Today morning Asian markets are trading flat to modestly lower and SGX Nifty is suggesting a flattish start for our market.

Nifty, after touching a high of 8967 in the initial trade, eased to close at 8918 yesterday, taking a breather after Tuesday's steep upmove.

The overall trend however continues to be up and we would continue with the advise of holding on to trading longs with a trailing stop loss for the major target of 9119, the top made in March 2015.

Immediate support on the hourly chart has moved up to 8810, which should serve as that stop-loss.

ECB holds its policy meeting today.

NIFTY ACHIEVES 8915 TARGET; STAY LONG WITH THE STOP-LOSS OF 8800

NIFTY ACHIEVES 8915 TARGET; STAY LONG WITH THE STOP-LOSS OF 8800

WORLD MARKETS                             

US indices, after falling into negative territory following the disappoint services data, reversed to end higher by 0.25%-0.5%, with Nasdaq closing at a new all-time high.

The ISM non-manufacturing PMI index for August came in at 51.4, the lowest read since February 2010. The expected reading was 55.0, slightly below a July read of 55.5. The miss, along with Friday's disappointing nonfarm payroll data, cut back expectations of a Federal Reserve rate hike in September.

U.S. Treasuries rose, with the two-year note yield at 0.72% and the benchmark 10-year note yield at 1.54%. Dollar index fell nearly a percent to 94.87 from 95.77. Gold soared $27 to $1354 per ounce.

US oil erased earlier losses to end 0.9% higher at $44.83 a barrel while Brent settled up 0.8% at $47.26.

European markets, except a 0.1% higher DAX, fell 0.2%-0.8%, reacting to lower oil nd poor US service sector data.

AT HOME

Truncated week started with a bang as benchmark indices soared a percent and half with Sensex and Nifty closing at the highest level since 3rd March 2015 and 13th April 2015 respectively. Sensex added 446 points to settle at 28978 while Nifty finished at 8943, up 133 points. BSE mid-cap and small-cap indices rose 1.8% and 1% respectively. All the BSE sectoral indices ended higher with Bankex and Consumer Durable indices leading the tally with gains of 3% each, followed by 2.8% rise in Auto index.

FIIs net bought stocks, index futures and stock futures worth Rs 1439 cr, 331 cr and 1174 cr respectively. DIIs were net sellers to the tune of Rs 268 cr.

Rupee appreciated 30 paise to end at 66.52/$, marking a four month high.

OUTLOOK

Today morning, Asian markets, except a 0.7% lower Nikkei, are trading with modest gains and SGX Nifty is suggesting about 25 points higher start for our market.

Just to reiterate, we had been working with the pattern target of 8915 ever since Nifty broke out of the four-week long 8730-8540 consolidation.

The benchmark soared 133 points to settle at 8943, achieving the target mentioned above and vindicating our view.

As mentioned in yesterday's report, next meaningful target to eye above 8915 is 9119, which is the high made on 4th March 2015. Meanwhile, the highest closing high is 8996 made on 3rd March.

Immediate support on the hourly chart has moved up to 8800, with the stop-loss of which trading longs should be held on to.

BHEL, GAIL and ONGC will report their quarterly earnings today.

NIFTY SET TO ACHIEVE 8845 TARGET; 8915 NEXT

NIFTY SET TO ACHIEVE 8845 TARGET; 8915 NEXT

WORLD MARKETS

                                                             

US markets were shut yesterday Labor Day holiday. On Friday US indices had risen 0.4% each following a disappointing employment report which reduced the probability of an interest rate hike in September.

European markets, after starting higher, slipped to end flat to modestly lower yesterday as the rally in oil prices faded after a joint statement on stabilizing oil prices from Saudi Arabia and Russia fell short of hopes.

Russia and Saudi Arabia confirmed they had agreed to cooperate to stabilize the oil market and limit output. Crude oil prices initially jumped on the news, but pared gains later. U.S. crude futures settled at $44.44 a barrel, after touching highs of $46.53 earlier, while Brent futures settled at $46.83 after hitting a session high of $49.40.

Markit's final composite Purchasing Managers' Index (PMI) for the euro zone in August fell to the lowest since January 2015 at 52.9, below a flash estimate of 53.3 and July's figure of 53.2. The U.K's Markit/CIPS services Purchasing Managers' Index (PMI) jumped to 52.9 in August from July's seven-year low at 47.4 Sterling traded around a seven-week high against the U.S. dollar after this data.

AT HOME

After trading in a narrow range for better part of the day, benchmark indices spike up in the late noon trade to end higher by four tenth of a percent, with Sensex and Nifty closing at the highest level since 16th April 2015 and 13th April 2015 respectively. Sensex added 109 points to settle at 28532 while Nifty finished at 8810, up 35 points. BSE mid-cap and small-cap indices gained 0.5% and 0.4% respectively. BSE Telecom index climbed 1.5%, becoming top gainer among the sectoral indices, followed by 1% each gain in Auto and Realty indices.

FIIs net bought stocks and stock futures worth Rs 231 cr and 401 cr respectively but net sold index futures worth Rs 399 cr. DIIs were net buyers to the tune of Rs 135 cr.

Rupee appreciated 13 paise to end at 66.82/$.

For the week, Sensex and Nifty gained 2.7% and 2.8% respectively.

Urjit Patel took the charge as the 24th Governor of Reserve Bank effective September 4.

OUTLOOK

Today morning Asian markets are trading flat to modestly higher and SGX Nifty is trading above 8900, which is higher by more than 60 points compared to Friday's close of Nifty future.

Readers would recall that ever since Nifty broke out of 8730-8540 consolidation, we have been working with targets of 8845 followed by 8915.

On Friday, Nifty closed at 8810 and a gap up opening today would see the benchmark achieve the first of the above mentioned targets and closing in on the second. Above 8915, 9119 the highest high till date, made in March 2015, would be the next major target to eye.

Immediate support on the hourly chart has moved up to 8740, with the stop-loss of which, trading longs should be held on to.

NIFTY CONSOLIDATES AFTER THREE DAY GAINS; 8660 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY CONSOLIDATES AFTER THREE DAY GAINS; 8660 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

S & P 500 ended absolutely flat, Dow added 0.1% and Nasdaq gained 0.3% yesterday, digesting weak manufacturing data, fall in oil and awaiting Friday's key jobs report.

WTI crude fell 3.5% to $43.16 a barrel and Brent was down 3.1% at $45.45.

The U.S. ISM manufacturing index for August came in at 49.4, which was the weakest reading since January and indicated sector contraction. The Markit manufacturing PMI stood at 52. Second-quarter productivity dropped 0.6% while weekly jobless claims came in at 263,000, slightly better than expectations.

Dollar index fell to 95.65 from 96. Gold gained $6 to $1317 an ounce.

In Europe, CAC ended marginally in the green while DAX and FTSE fell half a percent. Sterling jumped over 1% against the U.S. dollar to trade at around $1.329 after data showed that the U.K. manufacturing industry saw a strong post-Brexit vote rebound in August.

AT HOME

After three-day upmvoe, today was a day of consolidation as benchmark indices ended marginally lower after a rangebound but choppy trade. Sensex settled at 28423, down 29 points while Nifty lost 12 points to finish at 8775. BSE mid-cap and small-cap indices lost 0.4% each. BSE Telecom index plunged 5.7%, becoming top loser among the sectoral indices, followed by 2% cut in Realty index. Auto and Metal indices were the top gainers, up 0.4% and 0.3% respectively.

FIIs net sold stocks and stock futures worth Rs 302 cr and 405 cr respectively but net bought index futures worth Rs 364 cr. DIIs were net buyers to the tune of Rs 308 cr.

Rupee appreciated 1 paise to end at 66.95/$.

Government will seek Presidential assent for the landmark Constitution amendment bill for GST as 16 states have ratified the legislation. After the Presidential assent, the government will notify the GST Council. Union Finance Minister will head the Council, which will comprise state Finance Ministers. The GST Council will decide on the tax rate, cess and surcharges which are to be subsumed and also decide on the goods and services which would be exempted from the purview of the new indirect tax regime.

Bharti Airtel, Idea and R Com nosedived after Mukesh Ambani, speaking at the AGM of Reliance Industries, announced that Jio, the telecom venture of the group, would offer free voice calls, zero roaming charges, cheap data and a four-month introductory offer for free.

Maruti reported 12.2% y-o-y growth in August sales at 1.32 lac units. M & M reported 14% growth in auto sales at 40591 units and 16% growth in tractor sales at 13543 units. Eicher Motors sold 32% more Royal Enfields at 55721 units. Commercial Vehicles segment registered a growth of 13% at 4191 units. Hero Moto reported highest growth of 28% for 2016 at 6.6 lac units. TVS Motors reported 20% jump at 2.74 lac units. Tata Motors reported 6% growth at 43061 vehicles. Ashok Leyland reported 6% dip at 10897 units.

India's Nikkei/Markit manufacturing PMI rose to 52.6 in August from July's 51.8, hitting 13-month high and marking its eight month above the 50 level that separates growth from contraction.

OUTLOOK

Today morning, except 0.3% higher Hang Seng, other Asian markets are trading little changed and SGX Nifty is suggesting a flattish start for our market.

Yesterday was a day of consolidation as Nifty traded within the previous day’s range and ended marginally lower, digesting gains made over previous three sessions.

8845, the top made in April 2015, continues to be the immediate upside target to eye above which 8915 would be the next stop.

8660 continues to be the immediate support on the hourly chart, with the stop-loss of which trading longs should be held on to.

Key data to watch out today would be the US August employment report where addition of 180000 jobs is expected. This number would be the key determinant in deciding whether the U.S. Federal Reserve increases interest rates in September.

Indian markets will remain shut on Monday for Ganesh Chaturthi.

8845, 8915 CONTINUE TO BE UPSIDE TARGETS; STAY LONG WITH THE STOP-LOSS OF 8660

8845, 8915 CONTINUE TO BE UPSIDE TARGETS; STAY LONG WITH THE STOP-LOSS OF 8660

WORLD MARKETS                             

US indices fell 0.2%-0.3% with energy and materials leading the losses amidst falling oil prices.

US oil fell 3.6% to $44.70 a barrel after the Energy Information Administration said inventories rose by 2.3 million barrels last week. This was the second consecutive weekly build-up and higher than the estimated figure of 921,000 barrels. Brent fell 2.8% or $1.33 to $47.04.

ADP jobs report showed private sector added 177000 jobs in August, a tad higher than the expected 175000. Chicago PMI for August came in at 51.5. Pending home sales rose 1.3% in July.

Dollar index, after touching a high of 96.25, retreated to end at 95.99, the previous close being 96.05. Gold fell $5 to $1311 an ounce.

In Europe, FTSE, CAC and DAX lost 0.4%-0.6% while Italy and Spain were up about a third of a percent. Euro zone inflation for August came in at 0.2%, unchanged from the previous month. The region's unemployment rate for July also remained unchanged from the previous month, at 10.1%.

For the month, Dow and S & P 500 lost 0.2% and 0.1% respectively, snapping a six-month and five-month winning streak respectively. Nasdaq was up 1%.

AT HOME

Sensex and Nifty gained 0.4% and 0.5% respectively, extending the upmove to third straight day and closing at the highest level since 22nd July 2015 and 13th April 2015 respectively. Sensex added 109 points to settle at 28452 while Nifty finished at 8786, up 42 points. BSE mid-cap and small-cap indices gained 0.4% and 0.2% respectively. BSE Capital Goods index and Bankex were the top gainers among the sectoral indices, rising 1.4% and 1.2% respectively whereas Metal index tumbled 1.4%, becoming top loser, followed by 0.8% cut in Realty index.

FIIs net bought stocks, index futures and stock futures worth Rs 854 cr, 2886 cr and 204 cr respectively. DIIs were net sellers to the tune of Rs 848 cr.

Rupee appreciated 6 paise to end at 66.96/$

For the month, Sensex and Nifty gained 1.4% and 1.7% respectively, extending the winning streak to sixth straight month.

India's core sector, comprising of eight core industries, registered 3.2% growth in July, down from 5.2% in June.

India's GDP growth during the April-June quarter slowed to 7.1% from 7.5% in the same quarter last year and 7.9% in the fourth quarter of FY16. GVA (Gross value added) stood at 7.3% as compared to 7.4% y-o-y and 7.2% in the previous quarter. Agriculture sector growth dipped to 1.8% from 2.3% QoQ while construction also lagged with mere 1.5% growth versus 4.5% QoQ. Mining sector saw a contraction with growth plunging to 0.4% from 8.6% in the last quarter (QoQ). Services sector, however, saw a strong growth at 9.6% compared to 8.7% QoQ.

India's April-July fiscal deficit stood at Rs 3.93 lakh crore, or 73.3% of the budget estimates for 2016-17.

Oil marketing companies hiked petrol and diesel prices by Rs 3.38 and 2.67 a litre respectively. ATF prices however were cut by 4%.

BPCL's first quarter profit rose by 11% y-o-y to Rs 2620 cr. Operating profit grew 3% to Rs 3913 cr and margin expanded by 37 bps to 6.87%. Gross refining margin stood at USD 6.09.

Competition Commission of India yesterday imposed a penalty of around Rs 6300 on 10 cement companies for cartelization.

According to the report released yesterday, a panel headed by former chief justice of Delhi High court A P Shah has found Reliance Industries (RIL) and its foreign partners BP Plc and Niko Resources “guilty” for taking out natural gas that belonged to ONGC.

OUTLOOK

Today morning Nikkei and Shanghai are flat, other Asian markets are trading with cuts of upto 0.8% and SGX Nifty is suggesting about 15 points lower start for our market.

In yesterday's report we had mentioned that Nifty, after a four-week long consolidation, had broken out of the 8730-8730 resistance area and that 8845, the top made in April 2015, would be the immediate target above which 8915 would be the next target to eye.

The benchmark, after touching a high of 8819, eased to close at 8786.

8845 continues to be the immediate upside target above which 8915 would be the next target to gun for. Immediate support on the hourly chart has moved up to 8660, with the stop-loss of which, trading longs should be held on to.

Auto companies will report their August sales data today.