NIFTY ACHIEVES MAJOR DOWNSIDE TARGET; FED IN FOCUS

NIFTY ACHIEVES MAJOR DOWNSIDE TARGET; FED IN FOCUS

WORLD MARKETS

After a lower start, US indices broke into green, only to plunge as much as 2% from the top of the day to finally end with cuts between 0.6%-1.2% amidst choppy trade in oil, volatility in Ruble and ahead of the key Fed policy statement.

Despite a drastic move of raising the interest rates by 6.5% to stem the decline of ruble, the currency plunged as much as 23.2% against the dollar to touch an all-time los of 79.16 from where it rebounded all the way to 67.91.

Brent crude futures fell for a fifth straight day to end at $59.86, down $1.20 compared to previous close. Nymex crude finished a volatile session two cents higher at $55.93.

New-home construction in the U.S. topped a million on an annualized rate in November, while housing starts fell 1.6% and building permits declined 5.2% last month. Markit's preliminary reading on December manufacturing PMI stood at 53.7 vs. 55.2 estimate.

European markets surged between 2.2%-3.3%. Euro zone December flash composite PMI came in at 51.7, just above forecasts of 51.5 and November's final reading of 51.1.In Germany, the widely-watched ZEW Institute's economic sentiment index for December  shot up to 34.9 points, from 11.5 in November and above analyst expectations of 20.

AT HOME

It was mayhem in the market as benchmark indices nosedived nearly 2%, suffering the worst single-day fall in more than five months and closing at the lowest level in one and a half month. Sensex plunged 538 points to settle at 26781 while Nifty finished at 8068, down 152 points. BSE mid-cap and small-cap indices tumbled 3% and 3.4% respectively. Except a 1.7% and 1.1% rise in BSE IT and Teck indices respectively, all other sectoral indices ended in red with Metal and Realty indices leading the tally, giving away 4.2% and 3.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1247 cr, 557 cr and 105 cr respectively. DIIs were net buyers to the tune of Rs 535 cr.

Rupee plunged 59 paise to end at 63.53/$, a 13 month low.

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 important 8300 support on the daily chart we had been working with the downside target of 8070, which is the 61.8% retracement level of the entire 7723-8627 upmove.

Nifty yesterday nosedived 152 points to settle at 8068, achieving the target mentioned above and vindicating our view.

The view however continues to be bearish and will remain so until we see a resumption of the higher-top higher-bottom formation on the daily chart. However, after falling nearly 6.5% in last nine sessions and achieving major downside target, a bounce back in Nifty cannot be ruled out.

8250 is now the immediate resistance on the hourly chart, at least a crossover of which is required to suggest that the bounce back has some steam. Until then, every pull back should be taken with a pinch of salt.

Next support would come around 7950, where a trendline adjoining recent bottoms on the weekly chart is placed.

US Fed will issue a statement at the end of its tow-day meeting. The focus would be on whether the central bank reiterates its vow to maintain rates low for a considerable period amid signs of slowing growth in rest of the world.