NIFTY TUMBLES TO 19-MONTH LOW; 7350 CONTINUES TO BE CRUCIAL SUPPORT TO EYE

NIFTY TUMBLES TO 19-MONTH LOW; 7350 CONTINUES TO BE CRUCIAL SUPPORT TO EYE

WORLD MARKETS                             

US indices nosedived 2.2%-2.8% on Friday on the back of a slew of disappointing U.S. data, a plunge in oil to below $30 a barrel, and a sell-off in Chinese stocks.

Nymex oil, amid the China stock sell-off and concerns about more oversupply from possible lifting of international sanctions within days that could increase Iranian oil exports, tumbled $1.78 or 5.71% to $29.42 a barrel, the first settle under $30 in 12 years. Brent crude settled down 6.3% percent at $28.94 a barrel, its lowest in nearly 12 years.

Earlier Shanghai composite fell about 3.5% after Chinese loan data renewed concerns about the pace of economic slowdown. 

US retail sales declined 0.1% in December. Ex-autos, retail sales also fell 0.1%. Industrial production for December fell 0.4 percent. The Producer Price Index fell 0.2% in December after rising 0.3% in November. January Empire manufacturing index was minus 19.4.

European markets tumbled 2%-3% with energy and mining stocks leading the losses. Mining giant BHP Bilton tumbled over 6% after the company said it expects to take a $7.2 billion pre-tax impairment charge against the value of its U.S. shale assets.

Gold gained $17.10 to $1,090.70 an ounce.

For the week, Dow and S & P 500 fell 2.2% each while Nasdaq tumbled 3.4%. European markets lost 2%-4%. Asian markets fell 2%-9% with Shanghai Composite leading on the way down. Nymex oil collapsed 11.3% and Brent lost 13.7%.

AT HOME

After a positive start, benchmark indices nosedived more than a percent and half from top of the day to end lower by 1.3% and testing the lowest levels in 19-months. Sensex slipped 318 points to settle at 24455 while Nifty finished at 7438, down 99 points. BSE mid-cap and small-cap indices gave away 2.7% and 3.1% respectively. Except a 0.1% gain in BSE Energy and IT indices, all the sectoral indices ended in red with Utilities and Realty indices leading the losses, down 4.3% and 4.2% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 541 cr, 248 cr and 408 cr respectively. DIIs were net buyers to the tune of Rs 141 cr.

Rupee fell 30 paise to end at 67.60/$, marking a fresh 28 month low.

For the week Sensex and Nifty lost 1.9% and -2.2% respectively.

HUL missed estimates as net profit fell 22.4% y-o-y (expectation -14%) to Rs 971 cr. Revenue rose 2.7% (expectation 5.7%) to Rs 7981 cr. Volume growth stood at 6%. EBIDTA rose 7.5% to Rs 1431 cr and Operating margin expanded by 80 bps to 17.9%.

OUTLOOK

Today Morning Asian markets are trading with cuts of upto a percent and half and SGX Nifty is suggesting about 20 points lower start for our market.

Readers would recall that ever since Nifty broke 7540 support we have been saying that 7350-7450 is the next major support zone where 7450 is the lower band of bollinger on monthly chart and 7350 is where 34-month average is placed.

On Wednesday and Thursday, after dipping below 7450, the benchmark managed to close above 7500 but on Friday it closed at 7438 after a steep sell-off.

7350-7450 continues to be crucial support area. Upon breach of 7350, next meaningful support would come only around 7100, which is the 50% retracement level of the entire 5119-9119 upmove.

7605, the level from where Nifty reversed twice last week, is the immediate hurdle to eye, until the crossover of which bias will continue to be negative.

Asian Paint, Kotak Mahindra Bank and Wipro will report their quarterly earnings today.

U.S. stock markets will remain closed today for Martin Luther King, Jr. Day.