PRUDENT MORNING MANTRA - 23.07.2014

NIFTY SET TO ACHIEVE 7808 TARGET

WORLD MARKETS

US indices gained between 0.4%-0.7% yesterday, lifting the S&P 500 to a record, on the back of some steady economic data and corporate earnings.

Existing home sales hit an eight-month high in June while the consumer price index rose 0.3% in the month after a 0.4% rise in May.

After Tuesday's close, Apple reported quarterly earnings of $1.28 a share on revenue of $37.4 billion, versus expectations of EPS of $1.23 on roughly $37.98 billion in sales. Shares declined in after-hours trading. Microsoft rose in after-hours trading after the software giant posted earnings that fell short of Wall Street's expectations and revenue that surpassed estimates.

European markets jumped between 1%-2.2% with concern over events in Ukraine waning. A meeting of European Union foreign ministers reacted to calls for further action against Russia by issuing a statement saying it remained "ready to introduce without delay a package of further significant restrictive measures."

Meanwhile, Russia's envoy to Malaysia said in a news conference that the rebels did not have Buk missile systems and called for an investigation to be conducted by the international community.

Gold dipped $7.6 to $1306 an ounce and Nymex crude shed 17 cents to $104.4 a barrel.

                                                             

AT HOME

Benchmark indices surged more than a percent yesterday to close at the second highest level ever. Sensex soared 311 points to settle at 26025 while Nifty finished at 7768, up 84 points. BSE mid-cap index however gained just 0.1% and the small-cap index a tad lower. Except a 0.7% and 0.3% cut in BSE Capital Goods and Power indices, all other sectoral indices ended in green with Teck and IT indices leading the tally, climbing 2% and 1.8% respectively. 

FIIs net bought stocks, index futures and stock futures worth Rs 412 cr, 1201 cr and 725 cr respectively. DIIs were net buyers to the tune of Rs 59 cr.

Rupee appreciated 12 paise to close at 60.18/$.

Asian Paints reported better than expected 23.2% rise in consolidated quarterly net profit at Rs 338.7 cr and total income rose 19.3% to Rs 3362 cr. Operating margin expanded by 120 bps to 16.9%.

Axis Bank reported lower-than-expected 18.3% growth in June quarter net profit at Rs 1667 cr due to lower other income and higher operating expenses despite significant fall in provisions. NII grew 15.5% to Rs 3310 cr, the expected figure being 3276 cr. Gross NPA rose 12 bps sequentially to 1.34% and Net NPAs rose 4 bps to 0.44%.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting about 30 points higher opening for our market.

Yesterday, after achieving our initial target of 7730, Nifty moved further higher towards 7808, the ultimate target we had indicated when 7600 hurdle was crossed.

Traders are advised to book some profit in the vicinity of 7808 and trail stop loss in remaining positions to 7660, which is the immediate support on the hourly chart.

Cairn will report its quarterly earnings today.