NIFTY PLUNGES TO 6961; ACHIEVES ANOTHER DOWNSIDE TARGET

NIFTY PLUNGES TO 6961; ACHIEVES ANOTHER DOWNSIDE TARGET

WORLD MARKETS                             

After a flattish start, US indices saw a sustained northward move through the session to end with gains of 0.9%-1.3% as oil prices gained.

Nymex oil, after falling as much as 3%, reversed to close higher by 3% at $33.07 a barrel. Brent settled at $35.29 a barrel, up 2.6%. The gains came after a media report that the Venezuelan oil minister said his country, Saudi Arabia, Russia, and Qatar had settled on meeting in March.

US January orders for durable goods jumped 4.9%, beating expectations with the largest increase since March and reversing December's revised 4.6% dip.

Earlier Shanghai Composite plunged more than 6% as surging money-market rates signaled tighter liquidity and the offshore yuan declined for a fifth day.

European markets, on the back of positive set of corporate earnings, rose 1.8%-2.5%. Data showed that the inflation rate in the euro zone in January was 0.3% year-on-year, rather than a preliminary reading of 0.4%. On the flip side, U.K.'s fourth-quarter GDP was revised upwards to 0.5% quarter-on-quarter, from a preliminary reading of 0.4%.

AT HOME

Bears continued to dominate as Sensex and Nifty lost 0.5% and 0.7% in today's trade, extending the losing streak to third straight day and with Nifty closing at fresh 52-week low. In absolute terms, Sensex lost 113 points to settle at 22976 while Nifty ended at 6971, down 48 points. BSE mid-cap and small-cap indices fell 1.1% and 0.9% respectively. BSE Utilities and Power indices tumbled 2.5% and 2.2% respectively, becoming top losers among the sectoral indices while Metal and Telecom indices gained 0.4% and 0.2% respectively.

FIIs net sold stocks and index futures worth Rs 1466 cr and 2435 cr respectively but net bought stock futures worth Rs 469 cr. DIIs were net buyers to the tune of Rs 807 cr.

Rupee depreciated 17 paise to end at 68.73/$.

Sensex and Nifty lost 6% each in the February series.

Railway Minister Suresh Prabhu, in the Railway budget 2016-17 presented in the Parliament yesterday, increased plan outlay to Rs 1.21 lakh crore from Rs 1 lakh crore in the previous budget. Passenger tariffs and freight rates were left unchanged. He is targeting an operating ratio of 92%, worsening from current year's 90%, which itself was a miss from the targeted 89%.

He fell short of achieving revenue targets set in last year’s budget. As against a gross traffic receipts target of Rs 1.83 lakh cr, only Rs 1.67 lakh cr was achieved. Passenger traffic revenue stood at Rs 45384 cr as against expectation of Rs 50175 cr. Freight revenues were Rs 1.13 lakh cr, far lower than the estimated Rs 1.21 lakh cr.

For current year, he set gross revenue target of Rs 1.85 lakh cr, up 10% y-o-y. Key announcements included 3 freight corridors, establishing of 2 locomotive factories, redevelopment of 400 stations via PPP mode and 3-new high-speed trains. At least 20 projects via EPC route would be implemented in FY17. For funding these, Rs 21000 crore would be raised through IRFC bonds and Rs 18000 cr would be raised in partnership with NTPC. Institutional finance of Rs 20985 cr would also be sought.

OUTLOOK

Today morning, except a flattish Shanghai, other Asian markets are trading with gains of 0.5%-1% and SGX Nifty is suggesting about 70 points higher opening for our market.

Readers would recall that we had advise going short on Nifty on a sustained trading below 7140 for targets of  7060 and 7015, which were the 50% and 61.8% retracement levels of the recent 6869-7252 upmove. In yesterday's report we had mentioned that below 7015, Nifty can fall to 6960, which is the immediate previous bottom on the daily chart.

The benchmark touched a low of 6961 before closing at 6970, achieving the target mentioned above and vindicating our view.

Nifty is set to open with an upward gap today. However, the bias would continue to be negative until immediate hurdle on the hourly chart, placed around 7120, is taken out. 6960 on the way down, is the immediate support, a breach of which can take Nifty back to 6870 bottom.

Traders should await crossover of 6960-7120 levels for taking a fresh position on Nifty.

Chief Economic Advisor Arvind Subramanianm will present Economic Survey today.