NIFTY PLUNGES TO NEAR 6 MONTH LOW; STAY SHORT WITH THE STOP LOSS OF 8140

NIFTY PLUNGES TO NEAR 6 MONTH LOW; STAY SHORT WITH THE STOP LOSS OF 8140

WORLD MARKETS                             

US indices lost 0.5%-0.9% yesterday as markets weighed multi-month highs in bond yields amid greater expectations of tightening following Friday's strong jobs report.

The benchmark 10-year US Treasury yield held slightly lower at 2.39%. Dollar index fell about a percent with the euro rising to $1.1287.

Nymex oil fell 1.7% to $58.14 a barrel. Gold rose $5.5 to $1174 an ounce.

European markets lost 0.2%-1.3% on continuation of Greek debt negotiations. Tensions over the protracted nature of negotiations came to a head Sunday when European Commission President accused the Greek Prime Minister of distorting reform proposals.

On Sunday, leaders from the G-7 decided to keep sanctions against Russia in place until its President and Moscow-backed separatists fully implement the terms of a peace deal for Ukraine.

Shanghai Composite surged more than 2% yesterday to scale seven-year peak.

AT HOME

Benchmark indices plunged nine tenth of a percent today, with Nifty extending the losing streak to sixth straight day and closing at the lowest level since 17th December 2014. Sensex lost 245 points to settle at 26523, falling for the fifth straight day and ending at the lowest level since 20 October 2014. Nifty fell 70 points to finish at 8044. BSE mid-cap and small-cap indices lost 1.5% and 1.4% respectively. All the BSE sectoral indices ended in red with Consumer Durable and Metal indices leading the tally, giving away 1.9% and 1.7% respectively.

FIIs net sold stocks and index futures worth Rs 749 cr and 200 cr respectively but net bought stock futures worth Rs 364 cr. DIIs were net buyers to the tune of Rs 530 cr.

Rupee tumbled 33 paise to end at 64.08/$.

RBI yesterday issued a "strategic debt conversion" scheme-that will automatically give lenders 51% equity control in a company that fails to repay even after its debts are rejigged to give the management a second chance.

Unions representing workers at Tata Steel in Britain will go on strike on June 22, the GMB union said, marking the biggest industrial action in the British steel industry in over three decades.

OUTLOOK

China's May CPI has come in at 1.2% y-o-y Vs estimate of 1.3%. The PPI is down 4.6% Vs estimate of -4.5%.

Asian markets are trading flat to modestly lower and SGX Nifty is suggesting about 15 points lower opening for our market.

We had turned our near term view negative ever since 8350 support was broken on last Tuesday and have been asking holding on to short positions with a trailing stop loss.

Nifty plunged 70 points yesterday to end at 8044, marking the lowest finish since 17th December 2014 and extending the losing streak to sixth straight session.

The benchmark is now very close to the crucial 7991-7961 support zone where 7991 is the bottom made in May and 7961 is the bottom made in December 2014. This support zone also coincides with the lower band of bollinger on the weekly chart, upon breach of which, next meaningful support to eye would be 7640, where the 20-month moving average is placed.

Immediate hurdle on the hourly chart has now moved lower to 8140, which should serve as the stop loss in trading shorts.

MSCI is set to announce today whether it will include China's mainland-listed-A shares in its benchmark emerging market index.