ALL EYES ON RBI

ALL EYES ON RBI

WORLD MARKETS                             

US indices gained about a fifth of a percent amid mixed economic reports.

Data showed consumer spending was flat month-over-month, while construction spending for April increased 2.2%, the highest level in nearly 6-1/2 year. The Institute of Supply Management said its index of national factory activity was 52.8 in May, up from April's reading of 51.5. The May manufacturing PMI came in at 54, slightly above the initial read of 53.8 and little changed from April's 54.1 report.

European markets ended mixed with modest changes. Eurozone manufacturing PMI for May came in at 52.2, a tad below a preliminary number of 52.3.

Greece, which faces a June 5 deadline for a payment to the IMF, ended lower, with new comments by Greece's Prime Minister highlighting the stark differences between his opinions and those of some officials in charge of the country's economic aid.

AT HOME

After rising nearly four tenth of a percent in the morning trade, benchmark indices gave away all the gains in the noon trade to end little changed. Sensex settled at 27849, up 21 points while Nifty ended unchanged at 8433. BSE mid-cap and small-cap indices too ended flat. BSE Healthcare index plunged 2.8%, becoming top loser among the sectoral indices, followed by 0.6% cut in Bankex. BSE Capital Goods and Realty indices were the top gainers, climbing 2% and 1.6% respectively.

FIIs net bought stocks and index futures worth Rs 113 cr and 66 cr respectively but net sold stock futures worth Rs 207 cr. DIIs were net buyers to the tune of Rs 49 cr.

Rupee appreciated 11 paise to end at 63.70/$.

Maruti reported 13.8% y-o-y rise in May sales at 1.148 lac units. Ashok Leyland saw a massive 40% jump at 9294 units. Tata Motors saw 5.2% uptick at 39496 units. TVS sold 2.2 lac units, a growth of 6%. On the flip side, M & M reported 3% dip in total sales at 36706 units. Escorts also witnessed 16.4% fall at 4841 units.

Output in the eight key infrastructure industries declined in April for a second month in a row, by 0.4% this time, posing a question over the recovery in manufacturing shown by the official gross domestic product (GDP) data. This rate of fall was the steepest in 18 months, since October 2013.

OUTLOOK

Today morning Asian markets are trading mixed and SGX Nifty is suggesting a flattish start for our market.

In Friday's report we had mentioned that 8375 is the immediate hurdle, a sustained trading above which would generate a buy on the hourly chart and can take benchmark to around 8490, the top made the previous week.

Nifty touched a high of 8467 yesterday, coming closer to level mentioned above from where it slipped to end at 8433.

8490 continues to be immediate target above which 8525, where the trendline adjoining tops made in March and April is placed, would  be the next major hurlde to eye.

Immediate support on the hourly chart is placed at 8350, with the stop loss of which trading longs can be held on to.

RBI, in its policy review today, is widely expected to cut repo rate by 25 bps to 7.25% in today's policy review. As usual markets would also watch out for the tone of the policy for gauging the possibility and quantum of future rate cuts.