8000-8150 CONTINUES TO BE IMMEDIATE RANGE; BIHAR EXIT POLLS IN FOCUS

8000-8150 CONTINUES TO BE IMMEDIATE RANGE; BIHAR EXIT POLLS IN FOCUS

WORLD MARKETS                             

US indices ended with cuts of 0.1%-0.4% yesterday weighed by a decline in energy stocks and increased possibility of a December rate hike.

Testifying before the House Financial Services Committee, Fed chair Yellen said that December's monetary policy meeting would be a "live possibility" for a rate hike if upcoming economic data were supportive.

ISM non-manufacturing index for October rose to 59.1 from 56.9 the prior month. However, Markit said its October PMI services index declined to 54.8 from 55.1 in September. ADP employment report showed private companies added 182,000 jobs in October. September's trade deficit came in at $40.8 billion, its lowest level in seven months. Weekly mortgage applications fell 0.8% last week as interest rates rose.

Nymex oil fell $1.6 or 3.3% to $46.32 a barrel after weekly crude inventories rose for a sixth straight week.

Dollar index rose about 0.8% with the euro near $1.08, touching its lowest level since August. Gold fell $8 to $1106 an ounce.

Earlier Shanghai and Hang Seng soared more than 4% and 2% respectively after Caixin China General Services purchasing managers index improved to 52 in October from 50.5 in September and China’s central bank governor said the Shenzhen-Hong Kong Stock Connect could be launched by the end of the year.

European markets ended mixed with a higher FTSE and CAC and lower DAX and Italy. A rally in mining and oil stocks boosted sentiment but Volkswagen shares dragged the DAX lower.

Volkswagen tanked 9.5% after the company said it had uncovered "unexplained inconsistencies" in the carbon dioxide emission emissions from 800,000 of its cars. Mining major Glencore climbed 5.3% after the company said it was on track to reduce its debt and boost liquidity thanks to asset sales. 

AT HOME

After a 0.7% gap up opening, benchmark indices plunged a percent from the top of the day to end lower by about a fifth of a percent. Sensex lost 38 points to settle at 26553 while Nifty finished at 8040, down 20 points. BSE mid-cap index gained 0.2% while the small-cap index lost 0.3%. BSE Healthcare and IT indices lost 0.8% and 0.6% respectively, becoming top losers among the sectoral indices whereas Auto index climbed 1.7%, becoming top gainer, followed by 0.4% rise in Metal index.

FIIs net bought stocks worth Rs 33 cr but net sold index futures and stock futures worth Rs 294 cr and 34 cr respectively. DIIs were net sellers to the tune of Rs 45 cr.

Rupee appreciated 16 paise to end at 65.48/$.

India's October services PMI came in at an eight-month high of 53.2, up from September's 51.3 level. The composite PMI stood at 52.6 as against 51.5.

OUTLOOK

Today morning Asian markets are trading mixed and SGX Nifty is suggesting about 20 points lower opening for our market.

In yesterday's report we had reiterated our view that a crossover of 8150 is required to generate a buy on the hourly chart. Nifty, after touching a high of 8116 in the initial trade, nosedived to end at 8040.

After today's lower opening, the benchmark will be in the important 8000-8030 support area. 8030 is where the 38.2% retracement level of the entire 7540-8336 upmove is placed and in the vicinity of 8000, you have lower band of bollinger on the daily chart and a trendline support adjoining two major bottoms. Upon breach of 8000, 7940 and 7840, the 61.8% retracement levels of the 7540-8336 upmove, would be the next downside targets to eye.

All eyes would be on Bihar exit polls which would be released at 6 p.m. today after the conclusion of the final phase of voting. While most of the opinion polls said the NDA will emerge victorious (in-fact only two, Cicero and CNN IBN put the Grand Alliance on top), all of them consistently show that Kumar is the top choice for the chief minister’s post among voters. This contradiction is unusual and could play a crucial role in determining the outcome.