NIFTY SET TO ACHIEVE 7605-7620 TARGET

NIFTY SET TO ACHIEVE 7605-7620 TARGET

WORLD MARKETS                             

US indices soared two and a half percent on Friday after Bank of Japan unexpectedly adopted a negative interest rate policy for the first time. Encouraging earnings reports, a better-than-expected Chicago PMI report and stabilisation in oil prices also boosted the sentiment.

The Bank of Japan decided to extend its monetary stimulus program with negative interest rates. The central bank said it would apply a rate of negative 0.1% to excess reserves that financial institutions placed with it from February 16. Nikkei reversed mild losses to close up 2.8%. The Shanghai composite closed 3.1% higher.

Back in the US, Visa soared 7.4% after reporting earnings 1 cent above estimates. Microsoft added 5.8% after beating on both the top and bottom line.

Chicago PMI for January came in at 55.6, topping expectations of a 45.0 print and above December's 42.9 read. The advance read on the fourth-quarter showed U.S. GDP increased at a 0.7% annual rate, in-line with expectations but down sharply from the 2% percent rate in the third quarter. Consumer sentiment came in at 92.0 for January, down slightly from December.

Nymex oil rose 40 cents or 1.2% to $33.62 a barrel, for its first four-day win streak since April. Baker Hughes said the U.S. oil rig count fell by 12, marking a sixth-straight week of declines. In another newsflow an Iranian official said the country would not join an immediate OPEC production cut.

Dollar index climbed more than a percent.

European markets gained 1.6%-2.6%.

For the week, US indices gained 0.5%-2.3%. European markets, except a 2% lower Italy, gained 0.3%-3% with FTSE leading the tally.

On monthly basis, Nasdaq lost 7.9% for its worst month since May 2010 Dow and S & P 500 fell 5.5% and 5.1% respectively.

AT HOME

After a mildly lower start, benchmark indices saw a sustained northward movement through the session to end with hefty gains of 1.6% and 1.9% for Sensex and Nifty respectively. Sensex settled at 24871, up 401 points while Nifty climbed 139 points to finish at 7564. BSE mid-cap and small-cap indices gained 2% and 1.1% respectively. Except a 1% cut in BSE telecom index, all the sectoral indices ended in green with Consumer Durable and Healthcare indices leading the tally, up 3.3% and 2.5% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 572 cr, 1327 cr and 541 cr respectively. DIIs were net buyers to the tune of Rs 240 cr.

Rupee appreciated 45 paise to end at 67.78/$.

For the week, Sensex and Nifty gained 1.8% and 1.9% respectively.

Yes Bank soared after reporting better-than-estimated 25% rise in quarterly net profit at Rs 676 cr on strong NII, other income and operating profit growth despite higher provisions and tax cost. NII grew by 27.3% to Rs 1157 cr. Provisions rose 42% q-o-q and 112% y-o-y to Rs 148 cr. Gross NPA ratio rose to 0.66% from 0.61% while Net NPA ratio increased to 0.22% from 0.20%.

L & T reported 19.4% growth in third quarter net profit at Rs 1035 cr, while revenue rose 8.3% to Rs 25829 cr. Operating profit fell 8.2% to Rs 2649 cr and margin contracted by 180 bps to 10.3%. Bottomline ws in line but revenue and operational performance missed expectations. Order inflow in Q3 increased by 11% y-o-y to Rs 38528 cr. The company maintained FY16 revenue guidance of 10-15% but reduced its order inflow guidance to 0% from 5-7% earlier.

OUTLOOK

Today morning Shanghai and Hang Seng are trading in red after China's January official manufacturing PMI has come in at 49.4, down from 49.7 in December. Other Asian markets however are higher with Nikkei leading the tally. SGX Nifty is suggesting about 30 points higher opening for our market.

Ever since Nifty took out 7440 hurdle on last Monday, we have been working with an upside target of 7605-7620. The benchmark, after a three-day consolidation, took-off on Friday by adding 139 points to close at 7564.

After today's gap up opening, Nifty would be close to 7605-7620 target area. Also you have got 34-DMA around 7650, which would be an important near term hurdle to eye. Traders are advised to book some profit in trading longs in 7620-7650 area.

Immediate support on the hourly chart has moved up to 7450, which should serve as the stop loss in remaining positions.

Auto companies will report their monthly sales figures today. Tech Mahindra will report its quarterly earnings.