WORLD EQUITIES GET ECB BOOST; NIFTY SET TO TEST 8320-8380 HURDLE

WORLD EQUITIES GET ECB BOOST; NIFTY SET TO TEST 8320-8380 HURDLE

WORLD MARKETS                             

US indices soared 1.6%-1.8% yesterday following hints of new stimulus from the European Central Bank

At the press conference held after the interest rate decision, ECB President Mario Draghi said that the bank's policy would need to be "re-examined" in December and that the governing council would be ready to use all its available instruments within its mandate. This suggests that the quantitative easing program could be extended beyond September 2016.

McDonald's surged 9% after beating expectations on both EPS and revenue front. 3M reported mixed earnings, while Caterpillar missed on both lines.

Weekly jobless claims came in at 259,000, better than the expected 265,000. The September Chicago Fed national activity index came in at -0.37, slightly higher than the -0.39 August reading. September existing home sales rose 4.7% to 5.55 million.

Nymex oil rose 18 cents to $45.38 a barrel.

European markets, except a 0.4% higher FTSE, gained 2%-2.5%. Euro slipped sharply against the dollar after the QE hints, falling 1.6% to $1.11.

AT HOME

Benchmark indices ended marginally lower after a choppy trade, extending the losing streak to second day. Sensex settled at 27288, down 19 points while Nifty lost 10 points to finish at 8252. BSE mid-cap and small-cap indices lost 0.2% and 0.4% respectively. BSE Realty and Capital Goods indices fell 1.8% and 1% respectively, becoming top losers among the sectoral indices while Metal and Teck indices were the top gainers, up 1.2% and 0.6% respectively.

FIIs net sold stocks worth Rs 48 cr but net bought index futures and stock futures worth Rs 149 cr and 54 cr respectively. DIIs were net sellers to the tune of Rs 139 cr.

HDFC Bank matched expectations with September quarter net profit rising 20.5% y-o-y to Rs 2870 cr. NII rose 21% to Rs 6681 cr. Net interest margin fell 10 bps q-o-q to 4.2%. Asset quality improved with gross NPA ratio falling 4 bps q-o-q to 0.91%. Net NPA ratio improved to 0.25% from 0.27%.

Bajaj Auto reported better-than-estimated 58% to Rs 933 cr. Total income grew by 2.3% to Rs 6098 cr. Operating profit surged 17% y-o-y to Rs 1318 cr and margin expanded by 280 bps to 21.6%.

Wipro matched expectations on earnings front but gave a muted guidance. Dollar revenues rose 2.1% q-o-q to 1832 mn. Rupee revenue rose 4% to Rs 12043 cr and net profit rose 2.2% to Rs 2235 cr. For the October-December quarter, the company guided for IT services revenue of USD 1841-1878 mn, a growth of 0.5%-2.5% over September quarter, which was lower than the expectations of 1.5%-3.5% growth.

Idea posted worse-than-expected 13% dip in net profit at Rs 809 cr. Revenue fell 1.2% to Rs 8689 cr. EBIDTA margin fell to 35.2% from 36.7% q-o-q. Both voice and data realisations were under pressure

Cairn India posted 70% dip in net profit at Rs 673 cr. Average price realisation stood at $43.7 per barrel, 52% lower than $91.3 barrel registered in the same quarter last year. Revenue fell 44% to Rs 2242 cr.

OUTLOOK

Today morning Asian markets are trading with gains of 1%-2% and SGX Nifty is suggesting about 75 points higher opening for our market.

In Wednesday's report we had said that Nifty is close to major resistance area of 8320-8380 where 8320 is the 34-week average and 8380 is the 200 DMA and had advised booking some profit in the long positions and holding on to remaining ones with the stop loss of 8200.

The benchmark, after touching a high of 8294 in the morning trade, slipped to 8217 intraday, but recovered towards the end to settle at 8252.

A gap up opening today would take benchmark in the 8320-8380 resistance zone mentioned above. A successful crossover of 8380 will open up the space for the further upside till about 8500, where the trendline adjoining major tops on weekly chart is placed.

Immediate support on the hourly chart would have moved up to 8330 after today's gap up opening, which should serve as the revised stop loss for trading longs.

Asian Paints will report its quarterly earnings today.