NIFTY EXTENDS RECOVERY; CPI, IIP IN FOCUS TODAY

NIFTY EXTENDS RECOVERY; CPI, IIP IN FOCUS TODAY

WORLD MARKETS                             

Dow and S & P 500 ended little changed and Nasdaq ended higher by 0.3% after a choppy trading session as markets continued to watch for developments in negotiations between Greece and euro zone finance ministers. Nasdaq was boosted by more than 2% rise in Apple, which took the market cap of the firm to more than $700 bn.

Greek Finance Minister met with euro zone finance ministers yesterday where he was expected to unveil new reform proposals to make up for the ones that the new Greek government wants to scrap. He was also expected to ask for a "bridge program" to cover the government's funding needs while a new debt pact is agreed.

Other geopolitical developments included peace talks in Belarus by France, Germany, Russia and Ukraine, while fighting intensified in Kiev. President Barack Obama sent the text of his proposal to Congress regarding use of military force against the Islamic State.

Back in the US, economic data had budget deficit widening slightly in January and weekly mortgage applications falling 9%.

Crude oil inventories for the week rose to 4.9 million barrels, above expectations. Nymex crude fell 2.4% to $48.84 a barrel and Brent tumbled $3 to $54.80 a barrel. Gold lost 1% to $1220 an ounce.

Key European markets ended modestly lower while Spain tumbled 1.3%.

AT HOME

After a positive start, benchmark indices added some more gains through the choppy trading session to end higher by about two third of a percent, extending the recovery to second day. Sensex gained 178 points to settle at 28534 while Nifty finished at 8627, up 62 points. BSE mid-cap and small-cap indices gained 1.6% and 1.5% respectively. All the BSE sectoral indices ended in green with Capital Goods and Metal indices leading the tally, putting on 2% and 1.7% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 371 cr, 202 cr and 8 cr respectively. DIIs were net buyers to the tune of Rs 147 cr.

Rupee depreciated 7 paise to end at 62.25/$.

OUTLOOK

Even after more than six hours of negotiations over Greece, Eurozone finance ministers, along with the heads of the International Monetary Fund and the European Central Bank, failed to agree on a joint statement and said that they would keep talking in the coming days with the hope of coming up with a plan at their next meeting.

Today morning Nikkei is up nearly a percent and half on the back of weakening yen and better-than-expected core machinery orders for December. Other Asian markets are trading with modest cuts and SGX Nifty is suggesting a flattish start for our market.

We had advised booking profit in short positions after Nifty took support at the important 34-DMA mark placed around 8500. However we had also said that long positions should be initiated only after immediate resistance on the hourly chart, placed in 8650-8700 region, is taken out.

That continues to be the view. A crossover of this resistance area would generate a buy on the hourly chart and would pave the way for the further upside till about 8800, which is the 61.8% retracement level of the recent 8997-8470 fall.

Government will release CPI data for January with a new base. The range is seen between 5.3% -5.66%. In December, the figure stood at 5%.

December IIP will also be released today and is expected to show a growth of 1.8%, down from 3.8% in November.

BHEL, Coal India, Cipla and Hindalco will report their quarterly earnings today.