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Market Report

Wednesday, 18-June-2014

NSE

  • Sensex, the 30-share index ended at 25,246.25, down 274.94 points or -1.08 per cent. It touched intraday high of 25,609.28 and a low of 25,114.30 in trade today. The Nifty closed at 7,558.20, down 73.50 points or -0.96 per cent. It touched intraday high of 7,663 and a low of 7,515.50 in trade today, as the bulls faced stiff resistance in a pullback attempt after the market corrected from day's high on concerns over the ongoing violence in Iraq.

  • The violence in Iraq is getting intense as Kurdish security forces have now engaged in gun battles with ISIS fighters. After taking control of Iraq's biggest oil refinery in Baiji, ISIS militants were reported to be advancing towards capital Baghdad. The oil supply from Iraq is, however, unlikely to be affected as major oil export from Iraq is from southern Basra, which is unaffected from the violence. Cautious traders didn't take any chances and sold rate-sensitives and oil & gas stocks at higher levels.

  • International oil prices continued to remain firm on supply concerns. The Brent crude rose above $113 per barrel after Baiji refinery was shut and was at $113.54 per barrel, up 09 cents and crude oil was at $106.64 per barrel up 28 cents from its previous close. The Indian rupee remained under pressure on increased demand for the US dollar from oil importers. The dollar also moved higher ahead of the US Federal Reserve policy meet. The partially convertible rupee weak was at 60.40, down 37 paise, against its previous close of 60.03.

  • According to analysts, the situation in Iraq is not likely to go out of control. Traders are using Iraq violence as an excuse to get out of long trading positions. Such corrections are good for the market, which witnessed spectacular rally since February this year.

  • Globally, Asian markets ended lower with the exception of Nikkei which gained after the yen weakend against the US dollar. European markets were trading with marginal gains as investors remained cautious ahead of the two-day US Fed policy meet which ends later today.

  • Market is using this Iraq crisis as a reason to correct itself, but overall, we think that the confidence level across the market participants is pretty high, said Hemang Jani of Sharekhan. According to him, the correction would be a great opportunity for retail investors who were left out. There could be some kind of a pause around current levels, maybe another cut of about 80-100 points. I do not think there is a case for too much of a downtick from current levels, Jani added.

  • It is the momentum chasing the market right now and I am all for a bull market, says Mehraboon Irani of Nirmal Bang Securities. This bull market has a lot of steam left. We are going to see much higher levels, but at the end of it, I am not completely disowning the geopolitical problems, one of which is the Iraq problem. But all said and done, the bull market is here to stay, he added.

NIFTY 3-Month

(Data/Charts courtesy NSEI/Yahoo!/iCharts/The Economic Times)