Monday, July 14, 2014

PRUDENT MORNING MANTRA - 14.07.2014

NIFTY PLUNGES TO 7447, VINDICATES OUR VIEW; JUNE CPI, WPI IN FOCUS TODAY

WORLD MARKETS

US indices ended with modest gains on Friday but finished lower for the week as investors weighed quarterly results from Wells Fargo and readied for a slew earnings ahead.

Shares of Wells Fargo slipped after the nation's largest mortgage lender reported revenue just above estimates.

European markets too ended with modest gains.

On Friday, Portugal's government and central bank offered assurances that the nation's financial system was sound in an attempt to contain fears following financial irregularities at holding companies behind Banco Espirito Santo, the country's largest bank.

Nymex crude tumbled 2% to $100.8 a barrel, marking the largest one-day drop since April as supply risks eased in Iraq and Libya while stockpiles rose at Cushing, Oklahoma, the U.S. benchmark’s delivery point. Brent crude fell $2.01 to close at US$106.66.

For the week, Dow, S & P 500 and Nasdaq lost 0.7%, 0.9% and 1.6% respectively. European markets plunged between 2.6%-4.4%.

AT HOME

After gaining nearly three fourth of a percent in the initial trade, benchmark indices plunged more than 2% from the top of the day through rest of the session to end with steep cut of nearly a percent and half. BSE mid-cap and small-cap indices fell 2.8% and 3.3% respectively.

BSE Realty and Capital Goods indices nosedived 5.2% and 4.8% respectively, becoming top losers among the sectoral indices while IT and Healthcare indices gained 1.4% and 1.1% respectively.

FIIs net sold stocks and index futures worth Rs 723 cr and 534 cr respectively but net bought stock futures worth Rs 672 cr. DIIs were net sellers to the tune of Rs 45 cr.

Rupee appreciated 26 paise to close at 59.93/$.

For the week, Sensex and Nifty tumbled 3.8% and 3.6% respectively, matching the weekly decline registered in March 2013.

India's industrial production grew at 4.7% in May, up from 3.4% in April and the highest since October 2012.

OUTLOOK

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

For past couple of sessions we had been mentioning that 34 DMA placed around 7540 was the immediate support below which Nifty can plunged all the way to 7441, the low made on 23rd June, which is also the immediate previous bottom on the weekly char.

Nifty on Friday plunged all the way to 7447 before closing at 7460, nearly achieving the 7441 target and vindicating our view.

7441 continues to be important support, a breach of which would break the higher-top higher-bottom formation on the weekly chart. The nearest support upon happening that would come around 7200 where the trendline adjoining bottoms made in February and May is placed.

Immediate resistance on the hourly chart is placed around 7630, a crossover of which is required to generate a buy signal on the hourly chart.

Traders are advised to wait for the breach of 7441 for taking fresh shorts and long positions should be taken only upon the crossover of 7630.

India's CPI for June will be released today and is expected to ease to 7.45% from 8.28% in May. WPI for June too would be released today and is expected to ease to 5.61% from 6.01% in May.

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