ALL EYES ON FED

ALL EYES ON FED

WORLD MARKETS                             

US indices gained nearly a percent yesterday ahead of the important Fed decision. Energy and financials led the gainers.

Nymex oil rose for the second-straight day, up $1.04 or 2.9% to $37.35 a barrel.

November Consumer Price Index (CPI) came in unchanged, while ex-food and energy the figure rose 0.2%. In the 12 months through November, the core CPI rose 2% percent, which analysts noted matched the Fed's target for the first time since May 2014. Empire Manufacturing index for December showed minus 4.6, compared with November's minus 10.7 print. The NAHB housing market index missed expectations for a slight gain with a one-point decline to 61.

Dollar index rose about 0.6%. Treasury yields rose, with the 2-year yield at 0.97% and the 10-year yield near 2.27%.

European markets soared 2.4%-3.7%. Auto stocks jumped after data showed that Europe saw a 13.7% increase in new car registrations in November, the 27th month of consecutive growth.

AT HOME

After a rangebound morning trade, benchmark indices spiked up in the noon trade to end with gains of seven tenth of a percent, extending the winning streak to second straight day. Sensex settled at 25320, up 170 points while Nifty rose 51 points to finish at 7701. BSE mid-cap and small-cap indices gained 0.6% and 0.7% respectively. BSE Consumer Durable and Auto indices were the top gainers among the sectoral indices, rising 1.5% and 1.3% respectively while Metal and Telecom indices lost 0.2% each.

FIIs net bought stocks and stock futures worth Rs 49 cr and 3 cr respectively but net sold index futures worth Rs 438 cr. DIIs were net buyers to the tune of Rs 274 cr.

Rupee appreciated 17 paise to end at 66.92/$.

India's exports fell for the twelfth consecutive month in November by contracting 24% to $20 bn. Imports too fell 30% to $30 bn.

Oil Marketing Companies cut Petrol and Diesel prices by 50 paise and 46 paise respectively.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.5%-1.8% and SGX Nifty is suggesting about 30 points higher opening for our market.

In yesterday's report we had mentioned that "7700, the erstwhile support, would now act as the immediate hurdle, a crossover of which is required to generate a buy on the hourly chart, upon happening of which further upside till about 7815, which is the 61.8% retracement level of the recent 7979-7551 fall can materialise".

The benchmark yesterday touched a high of 7705 before closing at 7701 and is set to open higher today.

As mentioned above, 7815 is the next upside target to eye. Immediate support on the hourly chart is placed around 7645, with the stop loss of which trading longs can be initiated. Take the “options” route keeping in mind the important Fed decision.

US Fed, in its much anticipated decision, is widely expected to raise the fed funds rate by a quarter point today, while emphasizing that the pace of tightening will be gradual. A hike would be the first since June 2006.