US EQUITIES SOAR ON WEAK JOBS REPORT; NIFTY SET TO CHALLENGE 8050-8100 RESISTANCE AREA
US indices, after opening with cuts of nearly a percent and half on Friday, saw a near 3% rebound from the bottom of the day to end with gains in the vicinity of a percent and half after a weak U.S. employment report cooled expectations the Federal Reserve will start raising interest rates soon.
September jobs report showed the U.S. economy created 142,000 jobs, a number far below the expected 203,000. August and July figures were also revised lower. Unemployment held at 5.1% and the participation rate plunged to 62.4%. Average hourly wages fell by a cent to $25.09 and were up only 2.2% from the same month in 2014, pointing to marginal inflationary pressures.
In other economic news, August factory orders showed a decline of 1.7%, the largest drop in eight months.
The 10-year yield held near 1.98% after hitting 1.92%, falling below 2% for the first time since Aug. 24. The 2-year yield also hit its lowest level since that date, holding near 0.58% in the close. Dollar index fell 0.3%.
Nymex oil rose 80 cents or 1.8% to $45.54 a barrel after the number of oil rigs in operation in U.S. oilfields fell by 26 in the week ended Oct. 2. That compares with a total decline of 35 rigs in the previous four weeks.
European markets gained 0.4%-1.2%. Volkswagen closed down 3.7% after Credit Suisse slashed its price target for the stock and rated it "underperform." Mining giant Glencore continued to recover and gained 4.4% on Friday.
For the week Dow and S & P 500 gained 1% each while Nasdaq rose 0.5%. European markets ended mixed. Dax lost 1.4%, followed by half a percent lower CAC. FTSE and Italy gained three tenth of a percent.
After gaining nearly three fourth of a percent in the initial trade, benchmark indices gave away most of the gains through the session to end marginally higher ahead of the long weekend. Sensex settled at 26221, up 66 points while Nifty added 2 points to end at 7951. BSE mid-cap and small-cap indices gained 0.2% each. BSE Healthcare and Consumer Durable indices climbed 1.5% and 0.9% respectively, becoming top gainers among the sectoral indices while Realty index tumbled 1.8%, becoming top loser, followed by 0.6% cut in Power index.
FIIs net bought stocks and index futures worth Rs 49 cr and 964 cr respectively but net sold stock futures worth Rs 131 cr. DIIs were net buyers to the tune of Rs 152 cr.
Rupee appreciated 7 paise to end at 65.51/$.
HCL Tech plunged after the IT major lowered its dollar revenue guidance for the third quarter in a row. The company said that its dollar revenues for the September quarter would be impacted adversely to the tune of 80 bps on account of adverse currency movement and issues with a client in the public services vertical.
India's Nikkei manufacturing PMI fell to a seven-month low of 51.2 in September from 52.3 in August and against prediction of 52.
Maruti reported lower-than expected 3.7% y-o-y rise in September sales at 1.13 lakh units. Eicher Motors reported 59% surge in Royal Enfield sales at 44491 units. Company's commercial vehicle sales rose 10.7% at 4047 units. Ashok Leyland sold 14771 units, a growth of 61% y-o-y. M & M sold 6% less vehicles at 39693 units. Tata Motors reported 2% dip at 45215 units. Hero MotoCorp reported marginal increase at 6.07 lakh units.
For the week Sensex and Nifty gained 1.4% and 1% respectively.
Markets in China remain closed for National Day holidays and will re-open Thursday. Other Asian markets are trading with gains of upto a percent and half and SGX Nifty is suggesting about 50 points higher opening for our market.
In Thursday's report we had mentioned that having crossed the 7926 top made on RBI policy day, Nifty was headed to next resistance area placed in 8055-8100 region where two immediate previous tops on the daily chart as well as the upper band of the daily bollinger are placed.
The benchmark, after touching a high of 8008 in the initial trade, slipped to end at 7950 on Thursday and a gap up opening today will take it again near the 8000 mark.
8050-8100 continues to be important resistance area, a crossover of which will also confirm a higher-top higher-bottom formation on the daily chart along with a breakout from a "cup and handle" formation. The target of this formation comes to around 8400 which also coincides with 200-DMA.
7855 is the immediate support on the hourly chart, upon breach of which 7690, the bottom made last week, would be the next important support to eye.
Traders are advised to wait for the crossover of 8055-8100 resistance area before taking fresh longs on Nifty. Existing longs should carry a stop loss of 7855.