WORLD EQUITIES TUMBLE ON MULTIPLE WORRIES
WORLD MARKETS
US indices plunged
nearly 2% yesterday, with Dow and S & P 500 posting their first monthly
loss after January, on concerns over Europe's economy, an Argentine default,
Portugal’s banking sector and a jump in US labor costs.
Euro zone inflation
rose 0.4%, marking the lowest level since October 2009 and sparked renewed
fears that the region could be heading for a period of deflation.
After the country
officially defaulted on its debt on Thursday, Argentina's economy minister
threatened court action if bondholders demand to be paid. Later on Friday, a
U.S. court will determine if the credit event triggers insurance payments
relating to a default. The ruling would be the legal basis for bondholders to
push for payment.
Back in the US the
Labor Department reported that labor costs rose the most in more than five
years in the second quarter. Weekly jobless claims came in just above
expectations.
European markets
ended with average cuts of 1.3%. Portugal's PSI 20 index slipped over 3% with
shares of Banco Espirito Santo nosediving 40% after posting a net loss of 3.58
billion euros ($4.80 billion) for the first half of 2014 after the close of
trade on Wednesday.
Gold fell more than
a percent to $1282 an ounce; Nymex crude tumbled nearly 2% to $98.2 a barrel.
AT HOME
After trading in a
narrow range in the first half, benchmark indices saw a sharp dip later to end
lower by about eight tenth of a percent on the expiry day of the July
derivative series. Sensex lost 192 points to settle at 25895 while Nifty
finished at 7721, down 70 points. BSE mid-cap and small-cap indices however
gained 0.2% each. BSE Power index and Bankex were the top losers among the
sectoral indices, giving away 1.4% and 1.2% respectively. Realty and Healthcare
indices gained 0.2% each.
FIIs net sold
stocks and stock futures worth Rs 1655 cr and 122 cr respectively but net
bought index futures worth Rs 80 cr. DIIs were net buyers to the tune of Rs
1420 cr.
Rupee tumbled 49
paise to close at 60.55/$, marking a 3-month low.
ICICI Bank reported
better-than-expected 16.75% rise in June quarter net profit at Rs 2655 cr. NII
grew 17.55% to Rs 4491, beating the estimate modestly. Gross NPAs rose 2 bps
sequentially to 3.05% and net NPAs too rose 2 bps to 0.99%.
Maruti too reported
higher-than-estimated 20.6% rise in net profit at Rs 762.2 cr led by higher
other income. Revenue grew by 11% to Rs 11369 cr. Operating margins expanded by
30 bps to 11.7% but missed the estimated 12% figure.
India's core sector
grew at 7.3% in June, the highest in 9-months.
Oil marketing
companies slashed the petrol price by Rs 1.15 a liter while the diesel price
was hiked by 50 paise.
OUTLOOK
China's official
PMI for July has come in at 51.7, up from 51 in June and marking a 27-month
high. The HSBC version of the PMI has come in at 51.7, which is up from 50.7 in
June but lower than the flash estimate of 52.
Asian markets are
trading with average cuts of half a percent and SGX Nifty is suggesting about
50 points lower opening for our market.
As mentioned in
yesterday’s report, ever since Nifty achieved 7809 target, we have been
advising keeping trading volumes low and remaining on sidelines while Nifty
consolidates.
Nifty has already
started making lower-tops and lower-bottoms on the hourly chart and support
levels to watch on the way down are 7680, 7630 and 7580, which are the 38.2%,
50% and 61.8% retracement levels of the recent 7422-7840 upmove.
On the way up, 7800
is the immediate resistance, a crossover of which is required to bring the
bulls back in the game.
Auto companies will
report their July sales figures.
US non-farm payroll
data for July would be released today and is expected to show an addition of
2.3 lac jobs with unemployment rate remaining steady at 6.1%.
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