POSITIVE SURPRISE FROM CPI, IIP; 8320 IS THE IMPORTANT SUPPORT

POSITIVE SURPRISE FROM CPI, IIP; 8320 IS THE IMPORTANT SUPPORT

WORLD MARKETS                             

After plunging nearly a percent and half in the initial trade, US indices saw a sustained northward move through the session and ended flat to marginally higher as gains in energy offset earlier pressures from growth concerns.

Initial dip was attributed to yuan extended sharp losses to second day and dipping to 6.42 per dollar, its weakest level in four years, fueling expectations of more sustained weakness and a feared "currency war"—where countries artificially weaken their currencies to gain a competitive advantage.

Dollar index fell more than 1% as the euro approached $1.12. Nymex oil recovered from Tuesday's six-year low, settling up 22 cents or 0.5% at $43.30 a barrel. Brent traded near $49.60 a barrel. Gold surged $16 to $1124 an ounce.

European markets plunged 1.4%-3.4% with CAC and DAX leading the tally.

AT HOME

Benchmark indices plunged 1.3% in yesterday's trade, extending the losing streak to fourth day, amidst jitters over devaluation of Yuan and logjam in Parliament. Sensex plunged 354 points to settle at 27512 while Nifty finished at 8349, down 113 points. BSE mid-cap and small-cap indices lost 2.5% and 2.1% respectively. BSE Realty and Metal indices nosedived 5.4% and 4.4% respectively, becoming top losers among the sectoral indices while IT and Teck indices were the top gainers, climbing 2.6% and 1.7% respectively.

FIIs net sold stocks and index futures worth Rs 1855 cr and 2501 cr respectively but net bought stock futures worth Rs 333 cr. DIIs were net buyers to the tune of Rs 1224 cr.

Rupee plunged 58 paise to near 2-year low of 64.77/$.

India's Consumer Price Index (CPI) for the month of July eased to 3.78% from 5.48% in June, helped by the base effect and a major slump in food prices.

IIP rose to a four-month high of 3.8% in June compared to 2.7% in May.

Coal India reported worse-than-expected 6.7% fall in quarterly net profit at Rs 3764 cr. Revenues rose 6.5% to Rs 18955 cr. Blended realisation were down by 2%.

Rajya Sabha failed to take up the GST bill on the penultimate day of the monsoon session amidst continuous uproar.

In a move that will come as a major boost for the telecom industry, the Cabinet yesterday gave its approval to allow spectrum sharing between telecom companies. The move will allow the country's large number of telecom companies to share spectrum amongst themselves more efficiently, leading to greater utilization and improved service quality.

Cabinet also decided to divest 10% stake in Coal India.

OUTLOOK

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

We turned our short term view negative when immediate support of 8500 was broken. In yesterday's report we had mentioned that 8380, the 38.2% retracement level of the entire 7940-8655 upmove, would be the next support to eye below which 8322, the immediate previous bottom on the daily chart, would be the next crucial support, a breach of which would break the higher-top higher-bottom formation on the daily chart.

The benchmark plunged all the way to 8338 before closing at 8349.

8320 continues to be important support to eye, a close below which will break the higher-top higher-bottom formation on the daily chart as mentioned above. 8215, the 61.8% retracement level of the 7940-8655 upmove, would be the next downside target in that case.

Immediate resistance on the hourly chart is placed at 8450, a crossover of which should be awaited before initiating fresh longs.

ONGC and Tata Power will report their quarterly earnings today.