7240-7440 CONTINUES TO BE IMMEDIATE RANGE
While Nasdaq ended flat Dow and S & P 500 gained 0.7% and 0.5% respectively, helped by some recovery in oil prices and hopes of more stimulus from the ECB.
Nymex oil topped $30 a barrel before settling at $29.53, up $1.18 or 4.2%, for its largest one-day gain since October. Brent rose $1.42 or 5.1% to $29.31 a barrel.
ECB President Mario Draghi, at a press conference following the policy meeting, said that downside risks have increased again and the central bank needs to review, possibly reconsider policy stance at the next meeting. Draghi also said the central bank has the power, willingness and determination to act, noting it has plenty of instruments.
In US economic data, weekly jobless claims came in at 29300, a six month high. The January Philadelphia Fed index showed minus 3.5.
European markets, buoyed by ECB President's comments, ended with gains in the vicinity of 2%. The euro traded just below $1.09 after briefly falling below $1.08 on Draghi's comments. Italian banks rose sharply following Draghi's comments saying that a recent ECB investigation was never meant to affect the Italian banks so negatively.
Earlier Asian stocks closed sharply lower with Nikkei off more than 2% and Shanghai composite down more than 3% despite news China's central bank will inject more funds into money markets.
After gaining more than a percent in the initial trade, benchmark indices nosedived more than a percent and half from the top of the day to end lower by four tenth of a percent. Sensex settled at 23962, down 100 points while Nifty lost 32 points to finish at 7277. BSE mid-cap index lost 0.3% but the small-cap index gained half a percent. BSE Energy and Auto indices tumbled 2% and 1.9% respectively, becoming top losers among the sectoral indices while Bankex climbed 1.3%, becoming top gainer, followed by 0.8% rise in Finance index.
FIIs net sold stocks worth Rs 1747 cr but net bought index futures and stock futures worth Rs 329 cr and 373 cr respectively. DIIs were net buyers to the tune of Rs 1268 cr.
Rupee closed at 68.02/$, depreciating 7 paise compared to previous close.
Today morning Nikkei is trading with gains of more than 3%, other Asian markets are up 1-1.5% and SGX Nifty is suggesting about 60 points higher opening for our market.
In yesterday's report we had mentioned that traders should book some profit in short positions considering a positive divergence on the daily chart of Nifty and trail stop loss in remaining positions to 7440, which is the immediate hurdle on the hourly chart.
The benchmark, after making a high of 7399 in the initial trade, plunged sharply to end at 7277. However, a gap up opening today would take the benchmark closer to 7350 mark.
The positive divergence was intact even in yesterday's trade as despite the lower close, RSI still maintained a higher bottom.
7440 continues to be immediate hurdle, a crossover of which would generate a buy on the hourly chart and can lead to further upside till about 76057-7620, where the benchmark was resisted couple of times last week.
On the way down, 7240, the bottom made on Wednesday, is the immediate support, below which 7100, the 50% retracement level of the entire 5119-9119 upmove, would be the next support to eye.
ITC will report its quarterly earnings today.