BACK TO HURDLE AREA
Dow and S & P 500 climbed 1.6% each while Nasdaq soared 2.2% yesterday, extending the winning streak to third straight day, helped by recovery in oil and encouraging economic data.
Nymex oil rose $1.62 or 5.6% to $30.66 a barrel and Brent surged $2.70 or 8.4% at $34.88 after Iran's oil minister said that while he supported a production ceiling to stabilize oil prices - as mooted by big producers Saudi Arabia and Russia - it was the first of several steps that should be taken. An unexpected drop in crude inventories by 3.3 million barrels in the week to Feb. 12 to 499.1 million, compared with analysts' expectations for an increase of 3.9 million barrels also helped the gains.
Minutes of the January Fed meeting showed that policymakers were worried that tighter global financial conditions could hit the U.S. economy and considered changing their planned path for rate hikes in 2016.
In economic news, industrial production for January rose 0.9%, while capacity utilization was 77.1%. Producer prices unexpectedly rose last month, rising 0.1% after falling 0.2% in December. Housing starts fell 3.8% in January, while building permits fell 0.2%.
European markets climbed 2.5%-3%.
After plunging a percent and fifth in the initial trade, benchmark indices soared more than two percent from the bottom of the day to end higher by eight tenth of a percent. Sensex settled at 23382, up 190 points while Nifty added 60 points to finish at 7108. BSE mid-cap and small-cap indices gained 0.5% and 0.2% respectively. BSE Healthcare and Energy indices rose 1.6% and 1.4% respectively, becoming top gainers among the sectoral indices while Consumer Durable plunged 2.3%, becoming top loser, followed by 0.2% cut in Bankex.
FIIs net sold stocks and index futures worth Rs 560 cr and 213 cr respectively but net bought stock futures worth Rs 112 cr. DIIs were net buyers to the tune of Rs 385 cr.
Rupee depreciated 10 paise to end at 68.47/$, the lowest level in 30-months.
Today morning Asian markets are trading with gains of 1%-3% and SGX Nifty is suggesting about 70 points higher opening for our market.
In yesterday's report we had reiterated our view that 7240 continues to be immediate hurdle while 7056-7035, the gap created by the gap up opening on Monday, is the immediate support area, a breach of which can take benchmark back to 6870 bottom made last week.
Yesterday, Nifty broke 7056-7035 support area in the initial trade and plunged all the way to 6960 but rebounded sharply from there to end at 7108.
A gap up opening today would again take the benchmark close to 7205 top made on Tuesday. A sustained trading above 7205 would confirm a higher-top higher-bottom formation on the hourly chart and would pave way for the further upmove till 34-DMA, which is currently placed around 7440.
On the way down 6960, the bottom made yesterday, will now act as the immediate support, upon breach of which 6869, the bottom made last week, would be the next support to eye.