NIFTY TUMBLES TO LOWEST LEVEL SINCE OCTOBER AMIDST FII SELLING; CPI, IIP IN FOCUS

NIFTY TUMBLES TO LOWEST LEVEL SINCE OCTOBER AMIDST FII SELLING; CPI, IIP IN FOCUS

WORLD MARKETS

US indices, after rising 1%-1.5% in the initial trade, gave away about two third of the gains through the session to end higher upto half a percent.

Initial surge was on the back of positive economic data. Retail sales rose 0.7% in November, the largest increase in eight months. Jobless claims fell by 3000 to 294000 last week.

Pullback started after Nymex crude dropped below $60 a barrel and accelerated amid efforts to block a spending bill in the House, sparking worries of the government closing.

Nymex oil fell 1.6% to $59.95 a barrel, its lowest since July 2009.

European markets ended mixed with Germany and Spain in the green while others ending in red. Data showed that the uptake of a low-rate loan program by the ECB, known as a targeted long-term refinancing operation (TLTRO), met market expectations.

On the data front, a second reading of French inflation data showed that consumer prices were weaker than expected in November, showing a monthly drop of 0.2% percent, compared to a flash figure of -0.1%. Germany's inflation figure was unchanged for November. Meanwhile Germany's Ifo institute released its 2015 outlook which expected 1.5% growth for the country next year.

                                                             

AT HOME

After Wednesday's feeble recovery, weakness was back yesterday as benchmark indices ended lower by eight tenth of a percent after a choppy trading session to end at the lowest level since 30th October. Sensex slipped 229 points to settle at 27602 while Nifty finished at 8293, down 63 points. BSE mid-cap and small-cap indices lost two third of a percent. Except a 0.3% rise in BSE Healthcare index, all other sectoral indices ended in red with Oil & Gas and Realty indices leading the tally, giving away 2.5% and 2% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 808 cr, 724 cr and 404 cr respectively. DIIs were net buyers to the tune of Rs 432 cr.

Rupee plunged 31 paise to end at 62.33/$, a 10-month low.

OUTLOOK

Today morning Asian markets are trading with gains of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had mentioned that Nifty is as at a crucial juncture as it is near to some crucial supports like lower band of bollinger placed around 8300 and 38.2% retracement level of the entire 7723-8627 upmove placed at 8282.

Nifty yesterday ended at 8293, closing below the lower band of bollinger but holding the 8282 support.

8282 is the final hope for bulls. A sustained trading below this would be a severe setback on the daily chart. 8175 and 8070, the 50% and 61.8% retracement levels of the 7723-8627 upmove, would be the next supports to eye in that case.

Having said that, Nifty made a positive divergence on hourly chart yesterday, which suggests that there is less strength in yesterday's selling. Therefore traders would do well to wait for the breach of 8282 for initiating fresh shorts. 8430 continues to be immediate resistance, only above which bulls have an upper hand. Till then every rally should be taken with a pinch of salt.

India's Consumer Price inflation for November would be released today and is expected to further decelerate to 4.4% from 5.5% in October.

Also in focus would be October IIP, which is expected to show a growth of 2.1% as against an uptick of 2.5% in September.