OIL TUMBLES BELOW $40 WHILE DOLLAR INDEX SPIKES TO 12-1/2 YEAR HIGH
US indices fell 0.6%-1.1% yesterday as oil plunged, putting pressure on energy stocks.
Nymex oil tumbled 4.6% to $39.94 a barrel, below $40 for the first time in three months after weekly crude oil inventories showed an unexpected rise of 1.2 million barrels.
A mass shooting in San Bernardino, California, during the afternoon trading session also weighed on the sentiment.
Fed's Beige Book said consumer spending increased in nearly all districts while the manufacturing sector remained mixed, under continued pressure from the strong dollar, low commodity prices and weak global demand.
Ahead of Friday's November jobs report, ADP data showed November private payrolls topped expectations at 217,000. Revised third-quarter productivity rose 2.2%, while unit labor costs rose 1.8%.
Fed Chair Janet Yellen reaffirmed the case for a rate hike at the Fed's Dec. 16 meeting but reiterated that the decision will be data dependent.
Dollar index spiked to 100.51, its highest level since April 2003, before closing below 100. Gold fell $10 to $1054 an ounce.
European markets, except a 0.4% higher FTSE, lost 0.2%-0.6%. Euro zone, inflation grew 0.1% year-on-year in November. This is well-below the ECB's target of 2% and could push the case for further stimulus from the central bank. This sent the euro weaker against the dollar.
Benchmark indices could not sustain opening gains and ended lower by about a fourth of a percent. Sensex settled at 26118, down 52 points while Nifty lost 24 points to finish at 7931. BSE mid-cap and small-cap indices however managed to gain 0.2% and 0.01% respectively. BSE Bankex lost 1%, becoming top losers among the sectoral indices, followed by 0.9% cut in IT and Finance indices.
FIIs net bought stocks worth Rs 61 cr but net sold index futures and stock futures worth Rs 506 cr and 217 cr respectively. DIIs were net sellers to the tune of Rs 78 cr.
Rupee depreciated 10 paise to end at 66.59/$.
Today morning Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 40 points lower opening for our market.
At the risk of repeating, ever since Nifty crossed immediate hurdle of 7860, we have been mentioning that the "pullback rally" can extend upto 34-DMA.
The benchmark yesterday touched a high of 7980, coming in very close to 34-DMA placed at 8010, but slipped sharply to end at 7931.
After today's gap down opening, benchmark would be close to immediate support of 7890 we had mentioned in yesterday's report, a sustained trading below which generate a sell on the hourly chart. Next downside target to eye in that case would be about 7760, where the trendline adjoining recent bottoms on the hourly chart is placed.
On the way up, 34-DMA, which has now moved closer to 8000, would be the important hurdle to eye.
Traders can initiate short positions if Nifty starts trading below the low made in the first hour.
European Central Bank's (ECB) monetary policy committee is scheduled to meet today. It is widely expected that the central bank will announce further stimulus at the meeting in order to boost inflation and growth – however speculation is rife over what form those might take.