Thursday, August 14, 2014

PRUDENT MORNING MANTRA - 14.08.2014

NIFTY EKES OUT GAINS WHILE BROADER MARKET BLEEDS; STAY LONG WITH THE STOP LOSS OF 7645

WORLD MARKETS

US indices gained between 0.6%-1% on the back of surging tech, airline and biotech shares.

Retail sales for July came in flat, missing estimates and marking the weakest reading since January.  Business inventories in rose 0.4% in June after gaining 0.5% in May.

European markets climbed between 0.4%-1.4%. June industrial output numbers for the euro zone showed a fall of 0.3% from the month before. In the Uk, jobless rate fall to 6.4% in the three months through June.

In Ukraine, Kiev denounced Russia's dispatch of a humanitarian aid convoy as an act of unbounded cynicism serving pro-Russian separatists and said the trucks would not be allowed to pass. However, calming words from Polish Foreign Minister gave investors some comfort along with reports that the convoy will travel under cooperation with the Red Cross.

In the Middle East, Israel and Palestinian factions agreed to extend the truce for five more days on Wednesday in order to reach a lasting agreement to end the fighting in Gaza, Reuters reported.

Nymex crude rose 22 cents to $97.6 a barrel, while gold fell $4 to $1314 an ounce.
                                                             
AT HOME

Amidst a heavy sell-off in the broader market, benchmark indices managed to end marginally higher after a choppy trading session. Sensex gained 38 points to settle at 25919 while Nifty finished at 7740, up 12 points. BSE mid-cap and small-cap indices plunged 1.7% and 2.4% respectively. BSE FMCG index soared 2.2%, becoming top gainer among the sectoral indices, followed by 0.8% rise in IT and Healthcare indices. Realty index collapsed 5.2%, leading the losers' tally, followed by 2.6% cut in Capital Goods index.

FIIs net bought stocks, index futures and stock futures worth Rs 718 cr, 718 cr and 248 cr respectively. DIIs were net buyers to the tune of Rs 22 cr.

Rupee depreciated 14 paise to close at 61.21/$.

Tata Steel reported a worse-than-expected 70.4% dip in consolidated net profit at Rs 337.3 for the June quarter, impacted by provision for impairment of non-current assets, higher tax expenses and interest cost. Consolidated income grew by higher-than-expected 11% to Rs 36427 cr. Operating margins expanded by 53 bps to 11.73%, lower than the estimated 12.2% figure.

ONGC reported lower-than-estimated 19% rise in net profit at Rs 4782 cr impacted by higher exploration cost written off and depreciation cost. Net sales rose 13% to Rs 21851 cr. EBIDTA margin expanded by 470 bps to 40.5%, but were lower than the estimated 53% figure.

OUTLOOK

Today morning Asian markets are trading with modest gains and SGX Nifty is suggesting a marginally higher start for our market.

In yesterday's report we had mentioned that having crossed the tredline resistance on the daily chart, Nifty is headed to 7840, the all-time high made last month. That continues to be the view. Hold on to trading longs with the stop loss of 7645.

India's WPI for July will come out today and is expected to ease to 5.16% from 5.43% in June.

Hindalco and Cipla will report their quarterly earnings today.


Indian markets will remain shut tomorrow for Independence Day.

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