OIL PLUNGES TO FRESH FIVE-YEAR LOW; NIFTY TUMBLES TO 8430 AS EXPECTED

OIL PLUNGES TO FRESH FIVE-YEAR LOW; NIFTY TUMBLES TO 8430 AS EXPECTED

WORLD MARKETS                             

US indices plunged between 0.6%-0.8% yesterday, with the Dow registering biggest fall since October, weighed down by energy stocks on the back of melting oil.

Both Brent and U.S. crude tumbled 4% to new five-year lows after Morgan Stanley cut its Brent forecast. Nymex crude nosedived 4.2% or $2.8 to $63.05 a barrel, the lowest level since July 2009. Brent crude dropped $2.9 to $66.2, the lowest since September 29, 2009.

McDonald's fell after the fast-food chain reported global comparable sales declined 2.2% last month. Apple fell sharply, with the consumer-technology maker leading the technology sector lower.

Also weighing on the sentiment was weak Chinese trade data for November. Exports rose 4.7%, missing the 8% estimate. Imports fell 6.7% compared with projections of a 3.8% increase. Separately, Japan's economy contracted more than anticipated in the third quarter.

European markets fell between 0.7%-1%.

AT HOME

After last week's consolidation with a negative bias, benchmark indices decided to start the fresh week on a weak note by falling a percent and fifth yesterday, marking the largest fall since 16th October. Sensex slumped 339 points to settle at 28119 while Nifty finished at 8438, down 100 points. BSE mid-cap and small-cap indices lost 1.2% and 0.9% respectively. Except a 0.8% rise in BSE FMCG index, all other sectoral indices ended in red with IT and Teck indices leading the tally, giving away 3.2% and 2.6% respectively.

FIIs and DIIs net bought stocks worth Rs 4985 cr and 1031 cr respectively. But excluding Infosys deal, they were net sellers to the tune of about Rs 200 cr and Rs 270 cr respectively. FIIs net bought index futures worth Rs 60 cr but net sold stock futures worth Rs 1172 cr.

Rupee depreciated 6 paise to end at 61.83/$.

Infosys plunged nearly 5% after four founders sold shares worth Rs 6484 cr in the company.

India's current account deficit for the July-September quarter rose marginally to USD 10.1 bn (2.1% of GDP) from USD 7.8 billion (1.7% of GDP) on account of higher trade deficit contributed by both a deceleration in export growth and a n increase in gold imports.

OUTLOOK

Today morning Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 20 points lower opening for our market.

Ever since Nifty made an all-time closing high on 28th November, we have been mentioning that a negative divergence on daily chart has occurred which suggests that some sort of fatigue is setting in. We had also cautioned that a breach of 8500 would generate a sell on the hourly chart and could take Nifty to 8430 and then to 8350.

Nifty yesterday broke the 8500 support and plunged all the way to 8432, vindicating our view.

The benchmark continues to be in the sell mode on the hourly chart and next support on the way down continues to be about 8350.

On the way up, immediate resistance on the hourly chart is placed around 8530, with the stop loss of which, short positions can be held on to.