7350 CONTINUES TO BE MAJOR SUPPORT; 7500 IMMEDIATE HURDLE

7350 CONTINUES TO BE MAJOR SUPPORT; 7500 IMMEDIATE HURDLE

WORLD MARKETS                             

After opening with gains of nearly a percent, US indices gave away most of them to end mixed. Dow and S & P 500 closed 0.2% and 0.04% higher respectively while Nasdaq lost 0.25%.

Stocks opened higher as oil gained and softer Chinese data spurred some hopes of further monetary stimulus. China reported GDP of 6.9% for 2015, the slowest pace since 1990. Fourth-quarter GDP growth was 6.8% y-o-y, a touch below expectations. December retail sales showed 11.1% growth y-o-y, while industrial production grew 5.9%. Both were mildly below estimates. Asian markets closed higher, with the Shanghai composite up more than 3%.

However, Nymex oil reversed to end lower by 96 cents or 3.26% to $28.46 a barrel, its lowest since September 2003. Brent however gained 32 cents or 1.12% to $28.88 a barrel.

The International Monetary Fund cut its global economic growth forecast for 2016 to 3.4%, down from prior forecasts but up from a 3.1% forecast for 2015.

European markets, helped by gains in mining and energy stocks, rose 1%-2%.

AT HOME

Bringing some respite to bulls, benchmark indices climbed a percent and fifth, breaking a three day losing streak. Sensex settled at 24480, up 291 points while Nifty rose 84 points to finish at 7435. BSE mid-cap and small-cap indices gained 1.7% each. All the BSE sectoral indices ended in green with Industrial and Capital Goods indices leading the tally, up 3% and 2.8% respectively.

FIIs net sold stocks worth Rs 858 cr but net bought index futures and stock futures worth Rs 391 cr and 243 cr respectively. DIIs were net buyers to the tune of Rs 1387 cr.

Rupee appreciated 3 paise to end at 67.645/$.

HCL Tech reported better-than-estimated 1.4% q-o-q dollar revenue growth for the quarter ended December 2015 at USD 1556 mn. Constant currency growth stood at 2.1%. Net profit surged 11.2% and revenue increased 2.4% to Rs 10341 cr. EBIT declined 0.2% to Rs 2072 cr and margin contracted by 56 bps to 20%.

Reliance Industries reported better-than-expected 10% q-o-q growth in December quarter net profit at Rs 7218 cr on strong performance of refining business and higher other income. Gross refining margin jumped to seven-year high at USD 11.50 a barrel Vs 10.6 in September quarter. Standalone operating profit rose 4.5% to Rs 10272 cr and margin expanded by 200 bps to 18.2%.

OUTLOOK

Today morning Asian markets are trading with cuts of 1%-2% and SGX Nifty is suggesting about 75 points lower opening for our market.

After testing the major support of 34-month moving average placed at 7350 on Monday, Nifty rebounded yesterday to end at 7435.

However, a gap down opening today would again take the benchmark close to 7350 support.

As mentioned in yesterday's report, until the immediate resistance of 7500 is taken out, the bias will continue to be negative. Similarly a sustained trading below 7350 is required to take a fresh negative view. This makes 7350-7500 a no-trade zone, a breach of which, on either side, should be awaited before taking a fresh view. As mentioned in yesterday's report, 7100, the 50% retracement level of the entire 5119-9119 upmove, would be the next major target below 7350.

Axis Bank and Ultratech Cement will report their quarterly earnings today.