NIFTY ON THE VERGE OF BREAKING CRUCIAL SUPPORTS; CPI, IIP IN FOCUS

NIFTY ON THE VERGE OF BREAKING CRUCIAL SUPPORTS; CPI, IIP IN FOCUS

WORLD MARKETS                             

US indices gained 0.1%-0.2% yesterday, adding to strong gains made Wednesday but off-the day high as negative news out of Greece counterbalanced a good retail sales report.

An IMF spokesperson said that "major differences" remained with Greece and that its negotiating team had left talks in Brussels. Greece’s Athex Composite had ended 8.2% higher, closing before that discouraging news hit.

U.S. retail sales climbed 1.2% in May, rising for the third month in a row and offering more evidence of a springtime rebound in consumer spending after a winter lull. Figures for April and March were revised up.

Separately, initial jobless claims edged up by 2,000 to 279,000 last week, roughly matching forecasts for 275,000.

US 10-year treasury yield fell about 10 bps to trade below 2.4%. German 10-year bund yield fell below 0.9% after crossing 1% on Wednesday for the first time since September.

Nymex oil fell 66 cents or 1.1% to $60.77 a barrel. Gold lost $6 to $1180 an ounce. The supply of oil from the OPEC in May reached its highest level since August 2012, the IEA said in a report.

European markets gained 0.2%-0.7% but off the day high.

AT HOME

Wednesday's mammoth rebound proved deceptive as Sensex and Nifty plunged 1.8% and 2% respectively to end at the lowest level since 17th October 2014 and 21st October 2014 respectively. Sensex sank 470 points to settle at 26371 while Nifty finished at 7965, down 159 points. BSE mid-cap and small-cap indices lost 1.8% and 1.6% respectively. All the BSE sectoral indices ended in red with Auto index and Bankex leading the tally with cut of 2.4% each.

FIIs net sold stocks worth Rs 623 cr but net sold index futures and stock futures worth Rs 178 cr and 435 cr respectively. DIIs were net buyers to the tune of Rs 589 cr.

Rupee depreciated 13 paise to end at 63.97/$.

India is on path to emerge as the fastest growing economy on the World Bank growth chart of major economies for the first time. In its latest report, the Bank expects India to grow at 7.5% in 2015, outpacing China, which is poised to grow at 7.1%.

OUTLOOK

Today morning Asian markets are trading with modest gains but SGX Nifty is suggesting about 25 points lower opening for our market.

In yesterday's report we had mentioned that a crossover of 8152, the top made Wednesday, would confirm a buy on the hourly chart and can take Nifty to around 8250 where the 34 DMA is placed.

The benchmark touched a high of 8163 in the initial trade but could not sustain there and plunged sharply through the session to end at 7965.

After yesterday's fall, Nifty is very precariously poised. We have been talking about crucial 7997-7961 support area for quite some time which also coincides with the lower band of bollinger on weekly chart placed around 7960 as of now.

A breach of 7960, on weekly basis, would mark a breakdown and only meaningful support to eye in that case would be 20-month moving average, which is currently placed around 7600.

Hold on to your bearish bias and bets with the stop loss of 8070, which is the immediate hurdle on the hourly chart.

India's Consumer Price Inflation data for May would be released today and is expected at 4.99%, up from 4.87% in April. Core CPI is expected at 4.6% Vs 4.3%.

Also would be on tap would be IIP for April, which is expected to show a print of 1.6%, down from 2.1% in March.