ASIAN EQUITIES TUMBLE ON GREEK DEAL FAILURE; OUR CAUTION ON NIFTY VINDICATED

ASIAN EQUITIES TUMBLE ON GREEK DEAL FAILURE; OUR CAUTION ON NIFTY VINDICATED

WORLD MARKETS                             

US indices ended mixed on Friday, with Dow gaining 0.3%, S & P 500 falling 0.1% while the Nasdaq lost 0.6%, digesting earnings reports and awaiting resolution on the Greece debt talks.

Nike ended more than 4% higher at a record following a strong earnings report.

Greek Prime Minister Alexis Tsipras called an urgent cabinet meeting on Friday evening to discuss a bailout deal. The country's finance minister Yanis Varoufakis said that Saturday's meeting with the euro group of finance leaders will try to converge on a deal that includes debt and funding. He added that Greece has made concessions and that Athens rejects a 5-month funding proposal from lenders.

European markets, except a 0.8% lower FTSE, gained .2%-0.7%.

Earlier China's Shanghai Composite plunged more than 7%, posting its biggest one-day loss in five months.

Bond yields rose, with the U.S. 10-year Treasury yield near 2.48%. The 30-year yield climbed to 3.25%, the highest since last September 24. German 10-year bund yields leaped to 0.92%.

For the week, Dow and S & P 500 lost 0.4% each while Nasdaq lost 0.7%. European markets however so big gains of 4%-5%, except a modest 0.6% gain for FTSE.

Greece however failed to clinch a deal with its international lenders over the weekend to avert a default. Greek Prime Minister, in a surprise development announced a bailout referendum to be held on July 5, which was authorised by the Greek Parliament over the weekend.  A yes vote will mean that Greeks are willing accept the latest bailout terms offered by creditors to Athens, while a rejection will likely increase Greece's chances of exiting the Eurozone.

Greek government officials have confirmed early Monday that banks will be closed until July 6, while ATMs will reopen later in the day with a daily withdrawal limit of 60 euros. 

In another development, the People's Bank of China lowered its benchmark lending rates by 25 bps to 4.85% on Saturday, marking the fourth reduction since November, in an effort to prop up a slowing economy.

AT HOME

Benchmark indices ended modestly lower after a choppy trading session. Sensex lost 84 points to settle at 27812 while Nifty finished at 8381, down 17 points. BSE mid-cap index ended flat while the small-cap index gained 0.1%. BSE Capital Goods and Metal indices fell 1.1% and 0.9% respectively, becoming top losers among the sectoral indices while Consumer Durable and IT indices climbed 1.6% and 1.4% respectively, becoming top gainers.

FIIs net sold stocks and index futures worth Rs 204 cr and 261 cr respectively but net bought stock futures worth Rs 121 cr. DIIs were net buyers to the tune of Rs 234 cr.

Rupee depreciated 2 paise to end at 63.64/$.

Moving at a brisk pace, the Southwest Monsoon on Friday covered the entire length and breadth of the country, way ahead of schedule.

For the week, Sensex and Nifty gained 1.8% and 1.9% respectively, extending the winning streak to second consecutive week.

OUTLOOK

Today morning Asian markets are trading with cuts of 1-2% and SGX Nifty is suggesting more than 100 points lower opening for our market.

Readers would recall that for past couple of sessions we have been advising booking profits in trading longs above 8400 taking into consideration steep runup seen over previous eight sessions and looming major hurdles placed around 8470-8490.

Today's gap down opening would vindicate our caution.

In Friday's report we had also mentioned that immediate support on the hourly chart is placed around 8330, a breach of which can take the benchmark to 34-DMA placed around 8240.

Today's gap down opening would straight away take the benchmark below 8300 and in that case 8240 would be the next support to eye. Below 8240, 8125, the 61.8% retracement level of the recent 7940-8423 pullback, would be the next downside target.