TRAIL STOP LOSS TO 7620

TRAIL STOP LOSS TO 7620

WORLD MARKETS                             

US indices gained 0.7%-1% yesterday after a choppy session, shaking off pressure from an intraday dip in oil below $30 a barrel as Chinese yuan stabilised.

The Chinese central bank set the yuan mid-point fix at 6.5628 against the dollar, similar to Monday's fix of 6.5626.

Nymex oil fell 97 cents to $30.44 a barrel. Brent settled down 59 cents at $30.96, after dipping to April-2004 lows intraday. Copper hit a fresh low going back to April 2009.

Alcoa closed down 9% after reporting earnings that beat expectations but revenue slightly below forecasts.

Dollar index gained about 0.3%. US the 2-year yield touched 0.908%, its lowest in 4 weeks, and the 10-year yield touched a low of 2.08%, its lowest since late October. Gold fell $11 to $1085 an ounce.

European markets rose 1%-1.6%.

Earlier Chinese stocks closed 0.2% higher after wavering between gains and losses, following a sharp plunge Monday.

AT HOME

After a marginally higher start, benchmark indices saw a sustained downward move through the session to end lower by nearly two third of a percent. Sensex lost 143 points to settle at 24682, the lowest close since 16 October, 2014 while Nifty gave away 54 points to finish at 7510, marking the lowest finish since 14 July 2014. BSE mid-cap and small-cap indices lost 0.9% and 1% respectively. Except a 0.1% rise in BSE Consumer Durable and Healthcare indices, all the sectoral indices ended in red with Telecom index and Bankex leading the tally, down 1.9% and 1.8% respectively.

Industrial Production (IIP) for the month of November contracted 3.2% percent versus 9.8% percent growth in October, while the consumer price index (CPI) for the month of December came in at 5.6% compared with 5.41% for the month of November.

TCS missed street expectation by reporting 0.3% q-o-q dip in dollar revenue at USD 4145 mn. Rupee revenue rose 0.7% to Rs 27364 cr while net profit increased 0.9% to Rs 6110 cr. EBIT margin declined 48 bps to 26.59%.

OUTLOOK

China's December yuan-denominated exports are up 2.3% y-o-y while imports are down 4%.

Asian markets are trading with gains of 0.5%-2.5% with Nikkei leading the tally and SGX Nifty is suggesting about 50 points higher opening for our market.

Readers would recall that we have been bearish on Nifty ever since immediate support of 7890 was breached and have been advising holding on to the short positions with a trailing stop loss. Below 7540, we had given 7450, where the lower band of monthly bollinger is placed, as the next target.

Yesterday, the benchmark, after touching a low of 7487, recovered somewhat to end at 7510 and is set to open higher by about 40 points today.

Immediate resistance on the hourly chart has moved lower to 7620, which should serve as the revised stop loss for short positions. 7450 continues to be the next support below which 7350, where the 34-month average is placed, would be the major support to eye.