Auto volume update: Weak show by the leader in most segments- June 2016
² Maruti Suzuki: Plant shutdown results in 14% decline
² Eicher Motors: Sustaining its momentum
² Mahindra & Mahindra: Tractors continue on a strong trend
² Ashok Leyland: A decent show
² Tata Motors: Passenger car segment revives
² Two wheelers: Hero Moto sees substantial underperformance
Technical Acumen
Nifty surpassed previous peak of 8295 in last week's trade and thereby it confirmed a shift in the orbit on the upside. The upper end of current orbit is placed around 8649. However, 8389 could act as an immediate hurdle for the index i.e. 8% from all time high of 9119. Last week, Nifty took support at 7927 and staged sharp pullback. Incidentally, 13% from 9119 is placed around (7934). Fibonacci numbers (8 &13) tend to act as important turning points. A close above 8389 would provide fresh impetus for the index to surge higher towards midpoint of current gann channel (8465).
Derivatives Insight
² Nifty continued its rally closing above 8350 zone, resilience across the board seen with midcap outperforming in stable market.
² Global cues were positive, metals outperformance globally will have rub of effect on metal stocks.
² Options front Nifty July series heavy put writing seen at 8200 adding 10lacs open interest, maximum build-up continue at 8000 puts and 8500 calls.
² FII's stance on index continues to remain bullish with index futures long to short ratio now stands at 4.87x.
² Capital goods and Oil & gas stocks seen heavy build-up along with chart breakout on upside.
Fixed Income Market Overview
Global bond markets were receptive to expectations of more stimulus from central banks around world. Indian debt market also followed suit. Moreover, healthy onset of monsoon has reinforced the perception that inflation will moderate in the coming months. Bonds started the day on positive note at 7.44% while remained in positive territory throughout the day and ended the day at 7.42% vs 7.45% on previous day.
The demand at the fixed Repo window was Rs.27bn, whereas supply from fixed Reverse Repo stood at Rs.225Bn. Call WAR traded lower at 6.25% Vs. 6.39% on previous trading session.
The benchmark five-year OIS and one-year OIS closed lower, with the five-year OIS closing at 6.61% vs. previous day's close of 6.67%; the one-year OIS closed at 6.55% vs. previous day's close of 6.57%.
Commodity & Currency Cues
Commodities
Precious metals registered handsome gains, with silver prices witnessing a sterling performance (no pun intended). The metal was up by 5% on Friday, helped by the strength in both gold and non-ferrous metals. Overall, the commodity pack remains receptive to the renewed expectations of monetary stimulus from various central banks. Post Brexit, various economists and agencies have lowered growth forecasts for both UK and EU. BOE has already hinted about the possibility of some stimulus in the coming months. In US, there is a growing talk of Fed doing a U-turn on the process of policy normalisation. At the current juncture, gold prices are trading above US$1,350/oz and the trajectory is clearly inclined towards northwards. The yellow metal will continue to derive strength from multitude of factors including, weak global economic growth, negative interest rate policies and strong ETF buying.
LME base metals extended the upside, with Nickel prices spearheading the gains on Friday. Zinc has done extremely well over past few weeks and now the pervasive effect is being reflected on other metals as well.
Crude oil prices remain confined within a familiar range, as focus shifts towards structural global supply/demand balance.
Volatility has mitigated in major currencies, when compared with the action during last week. However, the pain in Yuan remains prominent. CNY is already around 5 year low and PBOC is willing to let the currency fall further till 6.8 levels against the greenback.
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