Wednesday, August 24, 2016

NIFTY REBOUNDS FROM 34-DMA SUPPORT; EXTENDS OVERALL CONSOLIDATION

NIFTY REBOUNDS FROM 34-DMA SUPPORT; EXTENDS OVERALL CONSOLIDATION

WORLD MARKETS                             

US indices gained 0.1%-0.3% but closed off the day high touched in the initial trade.

Oil prices climbed following a report that Iran indicated it may support joint action to prop up the oil market. The gains were later pared when data from the American Petroleum Institute showed U.S. crude inventories rose by 4.5 million barrels in the previous week, notably exceeding expectations for a drawdown of 500,000 barrels. US crude settled 1.5% higher at $48.10 a barrel and Brent added 1.6% to $49.96.

US new home sales for July unexpectedly surged, reaching their highest level in almost nine years. Markit Manufacturing PMI for August came in at 52.1.

European markets climbed 0.6%-2.5%. Markit's euro zone flash composite PMI for August came in at a seven month high of 53.3, up from 53.2 in July.

AT HOME

After falling more than half a percent, benchmark indices saw a smart rebound in late noon trade to end marginally in the green. Sensex added 5 points to settle at 27990 while Nifty finished at 8633, up 3 points. BSE mid-cap and small-cap indices fell 0.3% and 0.1% respectively. BSE IT and Teck indices climbed 1.8% each, becoming top gainers among the sectoral indices, followed by 1.7% rise in Telecom index. Oil & Gas index was the top loser, down 1.5%, followed by 1.1% each cut in Power and Capital Goods indices.

Gross buying and selling by FIIs in the cash segment was exactly the same, resulting in net figure of zero. They net sold index futures and stock futures worth Rs 631 cr and 524 cr respectively. DIIs were net sellers to the tune of Rs 452 cr.

Rupee appreciated 13 paise to end at 67.06/$.

Tata Power reported 76% dip in quarterly net profit at Rs 72.5 cr. Revenue fell 4.8% to Rs 6838 cr. Operating profit fell 11.3% to Rs 1635 cr and margin contracted 180 bps to 23.9%.

OUTLOOK

Today morning, Nikkei is up about half a percent, Hang Seng is down a third of a percent, other Asian markets are little changed and SGX Nifty is suggesting about 10 points lower start for our market.

In yesterday's report we had mentioned that the 34-DMA had moved up to 8570, which, along with immediate previous bottom of 8540, makes 8570-8540 an important support area.

Nifty, after touching a low of 8580, rebounded to close at 8633, vindicating the levels mentioned above and extending the broad consolidation.


34-DMA has now moved up to 8580, making 8580-8540 the support area to eye. 8700-8730 continues to be the supply area on the way up, a decisive crossover of which is required for fresh upmove.

Tuesday, August 23, 2016

STILL STUCK IN A RUT

STILL STUCK IN A RUT

WORLD MARKETS                             

US indices fell 0.1% each yesterday amid fall in oil prices.

Oil snapped 7-day winning streak as US crude September contract fell 3% to $47.05 a barrel while October contract slipped 3.6% to $47.41. Brent fell 3.4% or $1.72 to $49.16. China's July diesel and gasoline exports soared 182% percent and 145% y-o-y respectively. In the U.S., drillers added 10 oil rigs in the week to August 19, marking eight straight weeks of rig additions, while Iraq said it plans to increase its export of crude oil.

In Europe FTSE, CAC and DAX fell 0.2%-0.5% while Italy and Spain rose 0.4% and 0.2% respectively.

AT HOME

After gaining about a fifth of a percent in the initial trade, benchmark indices slipped about two third of a percent from the top of the day to end lower by about four tenth of a percent. Sensex settled at 27986, down 91 points while Nifty lost 38 points to finish at 8629. BSE mid-cap and small-cap indices lost 0.4% and 0.1% respectively. Except a 0.6% and 0.2% rise in BSE FMCG and Consumer Durable indices respectively, all the sectoral indices ended in red with IT index leading the fall, down 1.1%, followed by 0.9% each cut in Teck and Auto indices.

FIIs net sold stocks, index futures and stock futures worth Rs 300 cr, 457 cr and 308 cr respectively. DIIs were net buyers to the tune of Rs 52 cr.

Rupee depreciated 13 paise to end at 67.19/$.

NTPC reported 4.1% y-o-y growth in quarterly net profit at Rs 2369 cr. Total income from operations rose 11.5% to Rs 19063 cr. EBIDTA shot up 66% to Rs 5210 cr and margin expanded by 670 bps to 27.3%. Topline and bottomline met expectations whereas operational performance was ahead of estimates.

HPCL reported better-than-expected earnings on all parameters. Net profit rose 30% to Rs 2098 cr. Operating profit rose 17% to Rs 3627 cr and margin expanded by 130 bps to 7%. GRM stood at USD 6.83 a barrel against 8.56 in the previous quarter. The company declared 2:1 bonus.

OUTLOOK

Today morning Nikkei and Hang Seng are down about a fourth of a percent, other Asian markets are flat to modestly higher and SGX Nifty is suggesting about 10 points lower start for our market.

At the risk of repeating, Nifty continues to be in the consolidation mode for three weeks and yesterday was another day added in that tradition.

34-DMA has now moved up to 8570, which, along with immediate previous bottom of 8540, makes 8570-8540 an important support area. 8420, the 38.2% retracement level of the 7927-8728 umove, would be next support if 8540 is taken out. 8700-8730 continues to be the supply area on the way up, a decisive crossover of which is required for the fresh upmove.


Tata Power and Aurobindo Pharma will report their quarterly earnings today.

Monday, August 22, 2016

THIRD WEEK OF CONSOLIDATION FOR NIFTY; 8730-8540 CONTINUE TO BE THE BOUNDARIES

THIRD WEEK OF CONSOLIDATION FOR NIFTY; 8730-8540 CONTINUE TO BE THE BOUNDARIES

WORLD MARKETS

Dow and S & P 500 fell 0.24% and 0.14% respectively while Nasdaq ended marginally in the red on Friday, in the backdrop of further gains in oil prices and hawkish comments from Federal Reserve officials.

San Francisco Fed President signaled support for a rate hike in the near future in a speech.  Earlier this week, New York and Atlanta Fed presidents said a September rate hike may be on the table.

US oil rose 0.62% to $48.52 a barrel. Gold fell $11 to $1346 an ounce.

Dollar index broke 5-day losing streak to end at 94.50, up from 94.23 on the previous day.

European markets ended with cuts of 0.2%-2.2% with Italy leading the losses. Sterling fell 1% against the dollar after media reports suggested that British Prime Minister, Theresa May wanted to trigger Article 50 by next spring.

For the week, Dow lost -0.1% S & P 500 ended flat while Nasdaq gained 0.1%. European markets ended lower with FTSE, DAX and CAC down 0.8%, 1.6% and 2.2% respectively. Asia was mixed with Nikkei down -2.2% but 0.8% and 1.9% higher Hang Seng and Shanghai respectively.
                                                             
AT HOME

After gaining about a fourth of a percent in the opening trade, benchmark indices slipped a third of a percent from the top of the day to end marginally lower. Sensex settled at 28077, down 46 points while Nifty lost 6 points to finish at 8667. BSE mid-cap and small-cap indices outperformed yet again, rising half a percent each. BSE realty index fell 0.7%, becoming top loser among the sectoral indices, followed by half a percent each cut in IT, Telecom, Auto and Teck indices. Basic Material and Metal indices were the top gainers, up 1.1% and 1% respectively, followed by 0.9% higher Consumer Durable index.

For the week, Sensex lost 0.3% while Nifty was flat. Japan's Central Bank governor, in a media interaction, suggested that the Bank of Japan might cut rates further into negative territory in a bid to prop up the country's moribund economy.

FIIs net bought stocks, index futures and stock futures worth Rs 410 cr, 233 cr and 159 cr respectively. DIIs were net buyers to the tune of Rs 106 cr.

Rupee depreciated 25 paise to end at 67.06/$.

Government on Saturday named Urjit Patel, the Deputy Governor of RBI, as the successor of Raghuram Rajan. Urjit Patel will take charge as the 24th governor of RBI from 5th September. The appointment of Urjit Patel as the RBI governor is expected to result in smooth transition and continuity of the policy from the perspective of inflation targeting.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points higher start for our market.

Last week was not different in the overall scheme of things as the benchmark extended the two-week old consolidation by trading in less than 100 point range and within the 8730 hurdle and 8540 floor, which we have been mentioning as the consolidation zone.

As we have been mentioning, 8540 is the immediate previous bottom on the dally chart and 34-DMA has now moved up to 8560, which makes 8560-8540 important immediate support area to eye. On the way up 8700-8730 has been the strong supply area over last three weeks, a decisive crossover of which is required for the fresh upmove. If that happens, 8845, the top made in April 2015, would be the next target, followed by 9015 or so.


HPCL and NTPC will report their quarterly earnings today.

Friday, August 19, 2016

NIFTY BREAKS TWO-DAY LOSING STREAK, MOVES CLOSER TO UPPER RANGE OF CONSOLIDATION

NIFTY BREAKS TWO-DAY LOSING STREAK, MOVES CLOSER TO UPPER RANGE OF CONSOLIDATION

WORLD MARKETS                             

Dow rose 0.1% while S & P 500 and Nasdaq added 0.2% each after a choppy trading session amid rising oil prices

US crude rose 3% to $48.22 a barrel, it's highest settle since July 1, and Brent added 2% to $50.89 on further news suggesting OPEC and other major exporters could consider a deal to tackle the global oversupply.

Wal-Mart rose 1.9% after reporting better-than-expected earnings and revenue and raising its full-year guidance.

Weekly jobless claims fell 4000 to 262000. Leading indicators rose 0.4% last month, slightly more than expected.

Dollar index fell 0.7%. Gold gained $8 to $1357 an ounce.

European markets gained 0.1%-0.9%. Basic resources outperformed on the back of gains in commodities. U.K.'s retail sales for July were up 1.4% compared with June, beating a poll of 0.2%.

AT HOME

Sensex and Nifty gained 0.4% and 0.6% respectively, breaking the two-day losing streak but extending more than two-week consolidation. Sensex added 118 points to settle at 28123 while Nifty finished at 8673, up 49 points. BSE mid-cap and small-cap indices rose 0.4% and 1% respectively. BSE Utilities and Power indices climbed 1.8% each, becoming top gainers among the sectoral indices, followed by 1.6% rise in Bankex. Metal and Consumer Durable indices were the top losers, down 0.6% and 0.5% each.

FIIs net bought stocks, index futures and stock futures worth Rs 162 cr, 45 cr and 196 cr respectively. DIIs were net sellers to the tune of Rs 14 cr.

Rupee depreciated 5 paise to end at 66.81/$.

OUTLOOK

Today morning, Nikkei is up about half a percent, other Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a marginally higher start for our market.

As we have been mentioning, Nifty is in a consolidation mode for more than two-weeks after a big 10% upmove since June 24. We have also been mentioning that this consolidation should be considered healthy and overall bias would continue to be positive until higher-top higher-bottom formation on the daily chart is intact. However, we have been advising trading light in Nifty till the benchmark beaks out of this consolidation.

8710-8730 has been the supply area in this consolidation phase and crossover of the same is required for fresh upmove. 8845, the top made in April 2015, would be the next target if that happens.


34-DMA, which has now moved up to 8560 and immediate previous bottom on the daily chart placed at 8540, make 8560-8540 an important support area.

Thursday, August 18, 2016

CONSOLIDATION CONTINUES

CONSOLIDATION CONTINUES

WORLD MARKETS                             

After a negative start, US indices rebounded more than half a percent from the bottom of the day to end with modest gains yesterday, digesting the minutes of July Fed meeting.

The minutes showed FOMC members had a generally upbeat view on the U.S. economy and labor market, but most agreed more data were needed before increasing rates again.

Dollar index, after touching a low of 94.51, recovered to settle at 94.72, the previous close being 94.78. Gold fell $8 to $1349 an ounce.

US oil rose 0.5% to $46.79 a barrel after data from Energy Information Administration showed oil inventories decreased by 2.5 mn barrels last week.

European markets fell 0.5%-1.6%

AT HOME

Benchmark indices ended lower by a fifth of a percent, extending the losing streak to second consecutive day. Sensex lost 59 points to settle at 28005 while Nifty finished at 8624, down 18 points. BSE mid-cap and small-cap indices however gained 0.7% and 0.6% respectively. BSE IT and Teck indices tumbled 1.7% and 1.4% respectively, becoming top losers among the sectoral indices while Metal and Basic Material indices were the top gainers, putting on 2% and 1% respectively.

Gross FII buying and selling was exactly the same at Rs 4033 cr, resulting in the net figure of zero. DIIs were net sellers to the tune of Rs 89 cr. FIIs net sold index futures worth Rs 125 cr but net bought stock futures worth Rs 266 cr.

Currency market was shut yesterday for Parsi New Year.

OUTLOOK

Today morning, Nikkei, pressured by a stronger Yen which is trading below 100 against the dollar, is down about half a percent. Other Asian markets however are trading with gains of upto a percent with Hang Seng on the top. SGX Nifty is suggesting about 15 points higher start for our market.

Yesterday was no different in the overall scheme of things as Nifty extended more than two week old consolidation by falling 18 points to end at 8624.


As mentioned yesterday, 8540, which is the immediate previous bottom on the daily chart, also coincides with the 34-DMA, and therefore is the important immediate support to eye. On the way up, 8700-8730 is the supply area, a decisive crossover of which is required for the fresh upmove. Till that happens, trade light" "would continue to be the advise.”

Wednesday, August 17, 2016

NIFTY EXTENDS CONSOLIDATION; 8540-8730 ARE THE BOUNDARIES

NIFTY EXTENDS CONSOLIDATION; 8540-8730 ARE THE BOUNDARIES

WORLD MARKETS                             

US indices fell 0.4%-0.7% despite gains in oil and awaiting the release of the minutes from the Federal Reserve's July meeting.

Oil prices continued to advance, climbing to near five-week highs. US oil gained 1.8% to $46.58 a barrel and Brent was up 1.8% at $49.23.

July reading of the consumer price index (CPI) came in unchanged, matching expectations, and July housing starts came in at a five-month high. July industrial production for rose 0.7%, more than the 0.3% expected increase.

Dollar index fell nearly 0.8% to 94.78 from 95.60, the lowest level since June 23. Gold gained $9 to $1357 an ounce. Yen hit a high of 99.53 versus the dollar.

European markets lost 0.6%-1.2%. UK's CPI for July came in at 0.6%, marking the biggest rise in consumer prices since November 2014.

AT HOME

After falling about eight tenth of a percent in the morning, benchmark indices recouped nearly half of the losses to end lower by about a third of a percent. Sensex settled at 28065, down 88 points while Nifty lost 30 points to finish at 8642. BSE mid-cap index however gained 0.6% and the small-cap index ended flat.BSE Telecom index tumbled 1.6%, becoming top loser among the sectoal indices, followed by 1.3% each cut in IT and Teck indices.

FIIs net bought stocks and stock futures worth Rs 685 cr and 430 cr respectively but net sold index futures worth Rs 107 cr. DIIs were net sellers to the tune of Rs 109 cr.

Rupee appreciated 12 paise to end at 66.76/$.

OUTLOOK

Today morning Nikkei is up about half a percent, Hang Seng is marginally higher and Shanghai is down 0.3%. SGX Nifty is suggesting about 20 points lower start for our market.

As we have been mentioning Nifty is in a consolidation mode after a big upmove and traders would do well to keep trading volumes low till this consolidation gets over and a breakout, on either side, materializes.


34-DMA as well as the immediate previous bottom on the daily chart is placed around 8540, and therefore 8540 is the important immediate support to eye. On the way up 8700-8730 is the supply area, a decisive crossover of which is required for the fresh upmove.

Tuesday, August 16, 2016

NIFTY SET TO CHALLENGE 8728 HURDLE; 8540 IMPORTANT SUPPORT

NIFTY SET TO CHALLENGE 8728 HURDLE; 8540 IMPORTANT SUPPORT

WORLD MARKETS                             

Dow and S & P 500 rose 0.3% each while Nasdaq climbed 0.6% yesterday on the back of rising oil prices and closed at fresh record high.

US oil rose 2.8% to $45.74 a barrel and Brent added 2.9% to settle at $48.35 after Russian Energy Minister said that his country was consulting with Saudi Arabia and other producers to achieve market stability.

Empire State Manufacturing survey index fell five points to -4.2. NAHB housing index showed homebuilder sentiment rose 2 points.

European markets, except a marginally lower CAC, ended with gains of upto 0.4%.

Earlier, Japan's Nikkei 225 fell 0.3% after its GDP data disappointed, while China's Shanghai composite rose more than 2% on stimulus hopes, following weaker-than-expected July data.

AT HOME

Bulls made a grand comeback before a long weekend as benchmark indices soared nearly a percent in Friday's trade. Sensex settled at 28152, up 283 points while Nifty climbed 80 points to finish at 8672. BSE mid-cap and small-cap indices gained 0.8% and 0.2% respectively. BSE Bankex and Finance indices were the top gainers among the sectoral indices, rising 2% and 1.8% respectively. Realty and IT indices fell about half a percent, becoming top losers.

FIIs net bought stocks and stock futures worth Rs 1204 cr and 613 cr respectively but net sold index futures worth Rs 174 cr. DIIs were net sellers to the tune of Rs 392 cr.

Rupee depreciated 5 paise to end at 66.89/$.

For the week Sensex gained 0.3% while Nifty lost 0.1%.

SBI met expectations on earnings front and surprise positively on asset quality front. Net profit fell 31.7% to Rs 2521 cr. NII rose 4.2% to Rs 14312 cr. Provision and contingencies dropped by 43.7% q-o-q to Rs 7413 cr. Fresh slippages stood at Rs 8790 cr, down sharply compared to Rs 30313 cr in preceding quarter. Gross NPA as a percentage of gross advances rose 44 bps q-o-q to 6.94% and net NPA 24 bps to 4.05%.

Hindalco bet expectation with net profit soaring 381% y-o-y to Rs 294 cr. Revenue fell 11.4% to Rs 7597 cr. Operating profit rose 35% to Rs 1232 cr and margin expanded by 560 bps to 16.2%.

Sun Pharma matched expectation as consolidated net profit rose 266% to Rs 2034 cr and total income rose 22% to Rs 8243 cr. Operating profit surged 65% to Rs 2921 cr and margin expanded by 930 bps to 35.4%.

Cipla disappointed with 44% fall in net profit at Rs 365 cr. Revenue fell 6.4% to Rs 3594 cr. Operating profit slipped 42% to Rs 611 cr and margin cracked 1050 bps to 17%.

July CPI rose at a faster-than-expected 6.07% rate, up from June's 5.77% level, on soaring food prices, marking the fourth straight reading above the RBI's target of 5% by March 2017.

Industrial production expanded 2.1% y-o-y in June, faster than a revised 1.1% rise in May.

RBS has cancelled its 5-year, $300 mn, contract with Infosys due to weak markets condition.

Oil marketing companies cut petrol and diesel price by Rs. 1 and Rs. 2 respectively.

OUTLOOK

Today morning, except a modestly lower Nikkei, other Asia markets are trading with modest gains and SGX Nifty is suggesting about 30 points higher start for our market.

In Friday's report we had mentioned that "8518-8500 is the important support area to eye where 8518 is the immediate previous bottom on the daily chart and 8500 is where 34-DMA is placed. 8650 is the immediate hurdle on the hourly chart abvoe which 8728, the top made on Tuesday, would be the next hurdle to eye."

Nifty soared 80 points to settle at 8672 and is set to open near 8700 today.

8728, the top made last week, continues to be immediate target to eye above which 8845, the top made in April 2015, continues to be major target on the anvil.


Traders would still do well to concentrate on individual stocks and stay light on Nifty as the current move will still be classified as consolidation after a big upmove and lacks momentum as of now. Positional traders can stay/trade long with the stop loss of 8540, which is the immediate previous bottom on the daily chart.