OIL, GOLD REBOUND; ALL EYES ON RBI

OIL, GOLD REBOUND; ALL EYES ON RBI

WORLD MARKETS

US indices plunged between 0.3%-1.4% as a lacklustre start to the holiday shopping season overshadowed data that had a measure of U.S. factory activity slowing less than expected in November.

Americans spent about 11% less during the long holiday weekend ahead of Cyber Monday's online sales, according to survey results released Sunday by the National Retail Federation. Stocks cut their losses after the Institute for Supply Management said its national factory activity index dropped to 58.7 last month from 59 in October, with the latest figure beating expectations of 57.8.

Nymex oil jumped 4.3% to settle at $69, marking its best 1-day gain since August 2012 on reports that tumbling prices may have started to affect the fast-growing U.S. shale oil industry. Earlier, it hit a five-year low at $63.72. Brent crude rose 3.4% to $72.5 a barrel. Gold surged 3.6% to $1218 an ounce. Earlier, the yellow metal touched a low of $1143 an ounce after Swiss voters on Sunday rejected a proposal to lift central bank gold holdings to 20 percent of its forex reserves.

Rating agency Moody's cut Japan's sovereign rating.

European markets fell between 0.2%-1.6%. Markit's final November manufacturing Purchasing managers' Index for the euro zone stood at 50.1, its lowest level since June 2013 and missing forecasts of 50.4. Three of the euro zone's largest economies – Germany, France and Italy – saw manufacturing activity contract in October.

Earlier China's official factory index dropped to 50.3 for November, while the Markit index had it at 50.

                                                             

AT HOME

After a positive start, benchmark indices saw a sustained downward move through the session to end lower by about four tenth of a percent, breaking 3-day winning streak. Sensex lost 134 points to settle at 28560 while Nifty finished at 8556, down 32 points. BSE mid-cap and small-cap indices lost 0.1% and 0.7% respectively. BSE Consumer Durable index climbed 3.3%, becoming top gainer among the sectoral indices, followed by 0.8% rise in IT index. Oil & Gas and Power indices were the top losers, giving away 2.6% and 2.2% respectively.

Rupee ended unchanged at 62.02/$.

FIIs net sold stocks and index futures worth Rs 12 cr and 304 cr respectively but net bought stock futures worth Rs 350 cr. DIIs were net sellers to the tune of Rs 555 cr.

India's HSBC manufacturing PMI climbed to a 21-month high of 53.30 in November from 51.6 in October.

Maruti sold 1.1 lakh units in November, which was a growth of 6.8% month-on-month and 19.5% y-o-y. Ashok Leyland sold 7732 units, a growth of 44% y-o-y. TVS Motor sales jumped 36% y-o-y to 2.2 lakh units. Tata Motors reported 2% growth at 41720 units. M & M disappointed with 13% y-o-y degrowth at 34292 units.

India's core sector, comprising of eight core sectors, which contribute about 38% to the IIP, grew at 6.3% in October, against a growth of 1.9% in September, led by coal and electricity.

OUTLOOK

Today morning Asian markets are trading with modest cuts and SGX Nifty is suggesting about 30 points lower opening for our market.

Nifty yesterday touched a high of 8323, coming in very close to the target of 8640 we had given after 8520 target was achieved. From there it witnessed profit booking and finally settled at 8556.

On Friday, when Nifty ended at record high, RSI on daily chart made a lower top, giving rise to negative divergence. This indicates that there is fatigue setting in. Immediate support on the hourly chart has moved up to 8500, which should serve as the stop loss for trading longs. 8640 continues to be immediate target above which 8730 would be the next target to eye.

All eyes would be on RBI monetary policy review today. Given the central bank's aggressive stance to achieve 6% inflation by Jan 2016, markets are not expecting rates to be cut in this policy but the tone of the policy statement is likely to be dovish to build in a case for a rate cut going ahead. There is some expectation of an SLR cut though.