FED ENDS QE AS EXPECTED; TRAIL STOP LOSS TO 8000

FED ENDS QE AS EXPECTED; TRAIL STOP LOSS TO 8000

WORLD MARKETS

US indices ended modestly lower as markets mulled the ramifications of the monetary-policy decision from the Fed.

The U.S. central bank ended its historic monthly bond purchase program, as widely expected. However, it kept its language on keeping interest rates low for a "considerable time" but dropped its "significant" wording in regards to slack in the U.S. labor market, which some analysts take as a sign that the bank is focusing on an interest rate rise.

Key European markets ended flat to modestly higher while Italy and Spain tumbled a percent and half as fears about the region's banking sector following the results of Europe-wide stress tests weighed on these countries.

Dollar index climbed to 86 from 85.39 on the previous day. Nymex crude rose 1% to $82.2 a barrel; Gold fell $4.5 to $1226 an ounce.

                                                             

AT HOME

Benchmark indices added some more gains to the gap up opening in last hour of trade and finally ended higher by eight tenth of a percent. Sensex gained 217 points to settle at 27098 while Nifty finished at 8090, up 63 points. BSE mid-cap and small-cap indices gained 0.5% and 0.6% respectively. Except a 0.3% and 0.2% cut in BSE Healthcare index and Bankex, all other sectoral indices ended in green with Realty and Metal indices leading the tally, climbed 3% and 2.6% respectively.

FIIs net bought stocks and index futures worth Rs 786 cr and 2167 cr respectively but net sold stock futures worth Rs 61 cr. DIIs were net sellers to the tune of Rs 507 cr.

Rupee depreciated 3 paise to close at 61.35/$.

Sesa Sterlite reported slightly better-than-estimated bottom line and operational performance while topline was in line. September quarter net profit fell 31.7% y-o-y to Rs 1658 cr. Total income slipped 22.7% to Rs 19448 cr. Operating profit fell 1.2% to Rs 6381 cr.

Dr Reddy reported slightly above estimated profit but topline and operational performance missed street expectations. Consolidated net profit fell 16.8% to Rs 574 cr. Net sales rose 6.9% to Rs 3588 cr. Operating profit fell 12.2% to Rs 646.5 cr and margin dropped 400 bps to 18%.

Tech Mahindra reported better than estimated 5.2% sequential growth in dollar revenue at USD 900 mn for the quarter ended September. Rupee revenue grew 7.2% to Rs 5448 cr. Net profit grew 14.1% to Rs 720 cr on strong operational performance but was impacted by forex loss. Operating margins expanded by 220 bps to 17.4% but were lower than the estimated 18.3%.

In a boost to cash-starved real estate industry, government yesterday relaxed rules for FDI in the construction sector by reducing minimum built-up area as well as capital requirement and easing the exit norms.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a flattish start for our market.

Ever since Nifty broke the lower-top lower-bottom formation by crossing 7928 top last week, we have been working with targets of 8030 and 8130. The benchmark yesterday rose to 8098 before closing at 8090, coming in close to the second target mentioned above and vindicating our view.

The trendline adjoining major tops on the daily chart is now placed around 8115 and would be the immediate target on the way up.

Immediate support on the hourly chart has moved up to 8000, with the stop loss of which trading longs should be held on to.

ICICI Bank, Maruti, Bharti Airtel, ACC and Abuja Cement will report their quarterly earnings today.