NIFTY SET TO SURGE AFTER CONSOLIDATION; TRAIL STOP LOSS TO 8287

NIFTY SET TO SURGE AFTER CONSOLIDATION; TRAIL STOP LOSS TO 8287

WORLD MARKETS                             

US indices soared 1.4%-1.6% on Friday more than recovering their post-Brexit losses, after a surprisingly large beat on the June jobs report headline figure. The S&P 500 ended within 1 point of its record close of 2,130.82 hit last May.

Data showed US economy added 287,000 jobs last month, much better than the 175,000 expected. The unemployment rate edged higher to 4.9%, versus the 4.8% estimate. Average hourly wages rose 0.1% in June for a year-over-year increase of 2.6%. May's payroll count was revised down to only an 11,000 increase from the previously reported 38,000

US oil rose 27 cents or 0.6% to $45.41 a barrel. Gold fell $4 to $1358 an ounce.

European markets climbed 0.9%-4.1% with Italy leading the tally. Auto was one of the top performing sector as data from the China Passenger Car Association revealed that vehicle sales in China rose 19.4% last month, compared to June 2015.

For the week, US indices gained between 1.1%-1.9%, extending the upmove to second consecutive week. In Europe, FTSE gained 0.2% but DAX and CAC lost 1.5% and 1.9% respectively. Among Asian markets, Nikkei plunged 3.7%, Hang Seng lost 1.1% but Shanghai gained 1.9%. Oil plunged 7.3% for its worst decline since Feb. 5.

AT HOME

It was yet another day of consolidation as benchmark indices, after falling more than half a percent in the initial trade, recouped more than half of the losses through the session to end lower by about a fifth of a percent. Sensex settled at 27127, down 75 points while Nifty lost 15 points to finish at 8323. BSE mid-cap index managed to gain 0.1% while the small-cap index lost 0.2%. BSE Telecom index tumbled 2.2%, becoming top loser among the sectoral indices, followed by 1% each cut in Capital Goods and Oil & Gas indices. Auto and Healthcare indices were the top gainers, up 0.6% and 0.4% respectively.

FIIs net bought stocks and stock futures worth Rs 331 cr and 282 cr respectively but net sold index futures worth Rs 222 cr. DIIs were net buyers to the tune of Rs 282 cr.

Rupee appreciated 3 paise to end at 67.36/$.

For the week, Sensex Nifty ended flat.

Telecom stocks fell on concerns that DoT (Department of Telecom) will soon issue demand notice of over Rs 12,500 crore to six telecom operators amid allegations of under-reporting of revenue to the tune of Rs 45,000 crore.

OUTLOOK

Today morning Nikkei is surging with more than 3% gains, other Asian markets are up between 0.5%-1.5% and SGX Nifty is suggesting about 90 points higher start for our market.

In Friday's report we had mentioned that "After six consecutive up days, Nifty has been in a consolidation mode over last two days which should be considered healthy. 8240 continues to be the immediate support on the hourly chart with the stop loss of which trading longs can be held on to."

A big gap up opening would vindicate this view.

As we have been mentioning, 8655, the top made last July, continues to be major upside target to eye. After today's gap up opening, immediate support would have shifted to 8287, which should now serve as the stop loss for trading longs.

Indusind will report its quarterly earnings today.