8150-7927 ARE THE IMMEDIATE RESISTANCE-SUPPORT LEVELS

8150-7927 ARE THE IMMEDIATE RESISTANCE-SUPPORT LEVELS

WORLD MARKETS                             

World equities and oil nosedived while Gold soared on the unexpected outocome of the UK referendum where Brits decided to leave the European Union with 51.9% majority.

US indices 3.4%-4.1%.In Europe while FTSE itself recovered quite a bit from the 8% lower opening to end 3.2% down, other markets plunged 7%-12.5% with Italy and Spain leading the losses. Nikkei nosedived 8%.

Pound sterling, which had touhced a high of $1.50 before the Brexit on late Thursday, plunged all the way to $1.3224, its lowest since 1985, and was last near $1.366.

Treasury yields fell sharply. US 10-year yields hit a low of 1.406%, its lowest since July 26, 2012 before recovering to 1.57%. The German 10-year bund yield fell back into negative territory.

Financials led the fall in US as well as Europe.  Shares of Greek and Italian banks, which were already under pressure because of concerns about their bad debt piles, were notably poor performers. British retailers were hit, likely due to fears of the effect the vote could have on consumer confidence and spending. Travel and leisure stocks were also under pressure. Housebuilders felt the heat, due to uncertainty over investment in the U.K. post-Brexit.

After the unexpected result, David Cameron announced his resignation as Prime Minister of the United Kingdom.

In U.S. economic news, durable goods orders fell a more than expected 2.2% in May. The University of Michigan June consumer sentiment was 93.5.

WTI crude fell $2.47 or 4.9% to $47.64 a barrel. Gold climbed 5.5% or $59 to $1322 an ounce.

For the week, Dow and S & P 500 lost 1.6% each while Nasdaq fell 1.9%. In Europe, Germany fell 0.8% and France was down 2.1% but FTSE itself ended 2% higher.

Scotland's First Minister on Saturday said that the country would work to protect its EU membership, including preparing for a fresh independence vote.

Japan's government and central bank will hold an emergency meeting on Monday to discuss how to respond to Brexit-related market turbulence

AT HOME

After plunging more than 4% on the back of unexpected Brexit, benchmark indices recovered nearly half of the losses post European markets open to end lower by little over 2%. Sensex settled at 26398, down 605 points while Nifty lost 182 points to finish at 8089. BSE mid-cap and small-cap indices fell 1.1% and 1.5% respectively. All the BSE sectoral indices ended in red with Realty index leading the tally, down 3.7%, followed by Industrial and Metal indices leading the tally, down 3.6% each.

FIIs net sold stocks and index futures worth Rs 629 cr and 1768 cr respectively but net bought stock futures worth Rs 14 cr. DIIs were net buyers to the tune of Rs 115 cr.

Rupee depreciated 71 paise to end at 67.96/$.

OUTLOOK

Today morning, Nikkei is up nearly a percent and half and Shanghai is up about half a percent. Other Asian markets are down 0.4%-1% and SGX Nifty is suggesting about 60 points lower start for our market.

Readers would recall that in the run-up to the Brexit vote, we had been advising staying light on the back of uncertainty over the vote itself as well as the looming 8295 resistance.

The fear turned out to be correct as Nifty saw massive volatility on Friday, first plunging all the way to 7927, hen recovering sharply to close at 8089 but is set to open with a down gap today.

7927, the low made on Friday, which also coincides with the 61.8% retracement level of the 7716-8295 upmove, is the immediate support to eye. A breach of 7927 would open up the possibility of retest of 7716 bottom. On the way up, 8150, the 61.8% retracement level of the recent 8286-7927 fall, would be the immediate hurdle to eye above which 8295 would be the major resistance to eye.

Traders would do well to still keep the trading volumes low as volatility is likely to stay for couple of days.