Research Reports

Indian Markets

The Sensex fell as much as 140 points intraday after the RBI raised inflation forecast to 7% from 6.5% & revised gross domestic product growth lower to 6.5% from 7.3% for FY13. However, the stability in European markets ahead of European Central Bank's (ECB) meet helped Indian markets bounce back quite nicely in the last couple of hours of trade.

While the BSE Sensex closed 92.5pts or 0.5% higher at 17,236.2, the Nifty gained 29.2pts or 0.6% to close at 5,229. Broad market indices too ended higher as the BSE Midcap and Small Cap indices gained 0.58% and 0.13% respectively.

Market breadth was positive as the A/D ratio was 1.1:1 on the BSE. NSE cash turnover was Rs.10,832crs. Vs. Rs.9,225crs. in the previous session.

All the sectoral indices ended higher. The top gainers were the BSE Power, Realty, Capital Goods and Bankex indices. The top gainers from the BSE 30 were ONGC, Sterlite, Tata Motors, Reliance and Wipro. The top losers were Bharti Airtel, SBI, Hero Moto Corp and Jindal Steel and Power.

As per the provisional figures on Tuesday, FIIs were net buyers of Rs. 880cr in the cash market, while they were net buyers of Rs.577 cr in the F&O market. However, DIIs were net sellers of Rs.493 cr in the cash market.

US and European Markets

U.S. stocks closed down slightly on Tuesday amid another day of cautious trading ahead of meetings by U.S. and European central bankers. The Dow Jones slipped 64 points, or 0.5%, the S&P 500 lost 6 points, or 0.4%, and the Nasdaq fell 6 points, or 0.2%.

Personal income rose 0.5% in June, while spending remained unchanged, according to a government report. Economists surveyed by Briefing.com expected a 0.4% increase in income and a 0.1% rise in spending.

In a sign of a U.S. housing rebound, home prices in 20 major cities rose 2.2% in May, according to the S&P/Case-Shiller index. Economists were forecasting a 1.8% drop in prices in May, following a 1.9% decline in the previous month.
The Chicago PMI, a regional reading on manufacturing activity, rose to 53.7 in July from 52.9 the prior month. Economists were expecting the index to slip to 52.5 during the month.

Consumer confidence rose in July. The Conference Board's index rose to 65.9 from 62.7 in June. Economists were expecting the reading to decline slightly to 61.

European markets closed mixed. Britain's FTSE 100 slid 0.8% and CAC 40 dropped 0.5%, while the DAX in Germany rose 0.2%. The unemployment rate for the 17-nation eurozone held steady from the previous month at a record 11.2% in June, according to Eurostat, the European Union's statistical office. In the broader 27 nations that make up the EU, the unemployment rate in June remained at 10.4% - unchanged from May. Eurostat also said that inflation was unchanged in July, at 2.4%.

Barring Infosys & MTNL, which ended higher by 0.2% & 0.9% respectively, all the other Indian ADRs ended on a weak note on Tuesday. Tata Communications & Dr. Reddy?s ended lower by 2.6% & 1.9% respectively. ICICI & HDFC Bank fell by 1.8% & 1.3% respectively, while Wipro ended lower by 0.5%.

Latin American Markets

Among the Latin American markets, the Mexican markets fell by 1.5%, while the Brazilian index ended lower by 2%.

Asian Markets

The Asian indices are trading on a mix note. Shanghai is trading higher by 1%, while Hang Seng is trading flat. Kospi & Strait Times are trading marginally lower by 0.2%, while Taiwan is trading lower by 0.3%. Nikkei is trading lower by 1%.

As of IST 8.25 am SGX Nifty is trading marginally lower by 2.5 points.

Currencies

The USD lost ground against the Euro on Tuesday as anticipations mounted that the ECB is set to reports fresh dealings to tackle the crisis at Thursdays policy meeting, following bank head Mario Draghi pledged previous week to do whatever is essential to preserve the euro. Other hand, investors were cautious ahead of Fed Reserves policy setting meeting on Wednesday. Analysts doubt if the central banks would provide substantial monetary stimulus, despite remarks last week by ECB chief Mario Draghi, as US data pointed towards a possible pick-up in activity.

In volatile trade, the rupee on Tuesday dropped by seven paise to close at 55.65 against the US currency, notwithstanding RBI announcing easing of norms with regards to retention of foreign exchange earnings. RBI announced that corporates and exporters would be allowed to retain foreign exchange earnings as against the earlier provision that 50% of exporters earnings in foreign currency had to be converted into rupee. This is expected to increase the demand for rupee. Traders said that sustained month-end dollar demand from importers amid RBI maintaining a status quo on key policy rates put pressure on the rupee.

Commodities

Among the Metal prices, Aluminium, Copper & Zinc ended higher by 0.7%, 0.8% & 0.7% respectively, while Nickel fell by 0.3%.

Oil for September delivery fell $2.18 to $87.60 a barrel.

Gold futures for August delivery lost $9.20 to $1,610.50 an ounce.

Key events to watch for

US - Farm Prices (July 2012, M-o-M, Y-o-Y), Motor Vehicle Sales (July 2012), EIA Petroleum Status Report (Weekly), FOMC Meeting Announcement (June 2012)
India - 91 day T- Bills auction of Rs 70 bln, Reserve Money (weekly)

Outlook

Indian Markets could open on a flat note & trade in a narrow range of plus / minus 25 points on Nifty throughout the session. Immediate resistance for Nifty is at 5275, while strong support is at 5154.