OIL-TUMBLES TO NEAR SEVEN-YEAR LOW; NIFTY ON TRACK TO ACHIEVE 7540
US indices nosedived 1.8%-2.2% on Friday as oil hit near-seven-year lows and news of a roughly $800 million junk bond fund preventing withdrawals weighed on the sentiment. Caution ahead of Fed's highly anticipated decision on rates this week also played its role.
Nymex oil settled down $1.14 or 3.10% at $35.62 a barrel, its lowest since February 2009 after the International Energy Agency (IEA) warned global oversupply could worsen in the new year.
U.S. chemical giants DuPont and Dow Chemical officially agreed to merge in an all-stock deal to form a combined company valued at $130 billion.
November retail sales rose 0.2%, slightly missing expectations on the headline number. Taking out autos, gasoline, building materials and food services, retail sales increased 0.6% after an unrevised 0.2% gain in October. Producer price index advanced 0.3% in November after falling 0.4% in October.
European markets tumbled 1.5%-2.4% with DAX leading the tally.
Earlier, China's yuan sank to a four-and-a-half-year low after the PBoC set the midpoint rate for the currency down further, stoking expectations of further weakness in the currency.
For the week, US indices fell 3.3%-4.1% and European markets lost 3.5%-4.6%. Nymex oil sank 11%.
Thursday's recovery proved short-lived as Sesnex and Nifty nosedived 0.8% and 1% respectively on Friday to end at the lowest level since 7th September. Sensex settled at 25044, down 208 points while Nifty lost 73 points to finish at 7610. BSE mid-cap and small-cap indices lost 1.2% and 0.8% respectively. Except a 0.1% rise in BSE IT index, all the sectoral indices ended in red with Realty index and Bankex leading the tally, down 2.5% and 2.2% respectively.
FIIs net bought stocks and stock futures worth Rs 254 cr and 223 cr respectively but net sold index futures worth Rs 921 cr. DIIs were net buyers to the tune of Rs 293 cr.
Rupee depreciated 17 paise to end at 66.88/$.
IIP for October hit a 5-year high at 9.8% as against 3.6% in September.
For the week, Sensex and Nifty lost 2.3% and 2.2% respectively, extending the losing streak to second straight week.
Data released over the weekend showed China's factory output grew and annual 6.2% in November, up from October's 5.6% and beating expectations of 5.6%. Growth in China's fixed-asset investment, one of the main drivers of the economy, rose 10.2% in the first 11 months, unchanged from the gain in January-October, and higher than an expected 10.1% rise. Retail sales grew an annual 11.2% in November - the strongest expansion this year - compared with 11% percent in October.
Today morning Asian markets are trading with cuts of 0.6%-2.7% with Nikkei leading the losses and SGX Nifty is suggesting about 40 points lower opening for our market.
Despite Thursday's smart rebound, in Friday's report we had maintained our negative stance and had reiterated the downside target of 7540. The benchmark plunged 73 points on Friday and is set to open further lower today, vindicating our negative view.
7540 continues to be the downside target to eye below which next major support to eye would be 7300, in the vicinity of which 34-month average as well as the lower band of bollinger on the monthly chart is placed.
Immediate resistance on the hourly chart has moved to 7690, with the stop loss of which short positions should be held on to.
CPI for November would be released today and is expected to come in at 5.38% as against previous month's 5%. Core CPI is expected at 4.62%, up from 4.41%. November WPI too would be out today and is expected to sow a print of -2.6%, improving from previous month's -3.81%. Core WPI is expected at -2.38% as against last month's -2.9%.