6650 NEXT MAJOR SUPPORT BELOW 6880; 7300 IMMEDIATE HURDLE

6650 NEXT MAJOR SUPPORT BELOW 6880; 7300 IMMEDIATE HURDLE

WORLD MARKETS                             

After falling sharply intraday, US indices recovered nearly a percent from the bottom of the day but still ended with cuts of 0.4%-1.6% amidst global equity sell-off, falling oil prices and speculation about a possible OPEC production cut.

News reports citing energy minister of the United Arab Emirates said OPEC members were ready to cooperate on a production cut.

Nymex crude lost $1.24 or 4.5% to settle at $26.21 while Brent fell 78 cents or 2.5% to $30.06 a barrel. Gold, after touching a one year high of $1260.60 an ounce, settled at $1248, up 3.8% on safe haven buying.

European markets tumbled 2.4%-5.6% with bank and commodity stocks leading the losses. Sweden's central bank yesterday slashed its already negative deposit rates from -35 basis points to -50 basis points. Societe Generale nosedived 13% after fourth-quarter net income came in below expectations and the bank raised its provisions for litigation by 400 million euros. Many of the Italian lenders finished deep in the red over renewed concern over the health of the country's banking sector.

AT HOME

It turned out to be a disastrous Thursday as benchmark indices collapsed nearly three and half percent, registering the biggest daily fall since 24th August 2015 and closing at a 22-month low. Sensex nosedived 807 points to settle at 22952 while Nifty finished at 6976, down 239 points. BSE mid-cap and small-cap indices lost 3.3% and 4.6% respectively. All the BSE sectoral indices ended in red with Realty and Utilities indices leading the tally, down 5.9% and 4.9% respectively.

FIIs net sold stocks and stock futures worth Rs 1113 cr and 265 cr respectively, but net bought index futures worth Rs 415 cr. DIIs were net buyers to the tune of Rs 1222 cr.

Rupee slipped 45 paise to end at fresh 29-month low of 68.29/$.

SBI reported wore-than-expected 62% fall in quarterly profit at Rs 1115 cr. NII fell 1.2% to Rs 13606 cr. Gross NPA ratio rose 95 bps QoQ to 5.1% and Net NPA ratio rose 75 bps to 2.89%. Provisions for bad loans shot up 82% to Rs 7949 cr. Gross NPA jumped 28% q-o-q to Rs 72792 cr. Fresh slippages stood at Rs 20692 cr, three-and-a-half times higher compared to Rs 5875 cr in preceding quarter.

Tata Motors reported 2% dip in consolidated net profit at Rs 3508 cr, impacted by JLR business, weaker sales mix and higher depreciation cost. Revenue rose 2.9% to Rs 72256 cr. Consolidated operating profit fell 7% to Rs 9380 cr and margin contracted by 140 bps to 13%.

BHEL reported a massive loss of Rs 1102 cr for the October-December quarter. Revenue fell 14% to Rs 5326 cr. Operating loss stood at Rs 1639 cr against profit of Rs 294 cr. outstanding order book stood at Rs 1.09 lac crore, up 5%.

ONGC reported 73.4% fall in net profit at Rs 1286 cr, impacted by impairment loss of Rs 3994 cr due to fall in crude oil prices. Revenue fell 10.5% to Rs 18498 cr. Operating profit fell 8.3% to Rs 8043 cr but margin expanded by 110 bps

Coal India reported better-than-expected 14% rise in net profit at Rs 3718 cr. Revenue fell 6.8% to Rs 18791 cr. Operating profit surged 46% to Rs 5092 cr and margin expanded by 600 bps to 25.6%.

Hero Motocorp reported in-line with estimated 36.5% rise in net profit at Rs 796 cr. Revnue rose 6.7% to Rs 7295 cr. Operating profit shot up 39% to Rs 1140 cr and margin expanded by 360 bps to 15.6%.

OUTLOOK

Today morning, Nikkei, after yesterday's holiday, has opened down more than 4%. Other Asian markets are down 0.5%-1% and SGX Nifty is trading at 7010, suggesting about 20 point higher opening for our market.

Readers would recall that we have been bearish on Nifty ever since immediate support of 7350 was broken. 7240, the bottom made in January was our first target below which we had given level of 7120, which was the 50% retracement level of the entire 5119-9119 upmove.

The benchmark however saw a massive sell-off of 239 points yesterday to close at 6976.

With the decisive breach of 7120, the next meaningful and major support to eye is 6650, which is the 61.8% retracement level of the 5119-9119 upmove. Before that one minor support, based on formation on daily chart, comes around 6880.

Keep wearing your bear mask until immediate hurdle on the hourly chart placed at 7300 is taken out.