NIFTY AGAIN RESISTED NEAR 7540; 7424 IS THE IMMEDIATE SUPPORT
Dow and S & P 500 ended little changed while Nasdaq lost 0.3% yesterday on the back of lower oil prices and volatility in the European markets.
European markets reversed sharp gains to end with cuts of 0.5%-2.3% following comments by the president of the European Central Bank (ECB) and a sharp slip in commodity prices.
ECB announced a range of measures including a cut to its main refinancing rate by 5 bps to 0.0 percent and a cut to its deposit rate by 10 bps to -0.4%. The bank also extended its monthly asset purchases from 60 billion euros to 80 billion euros.
Equities however reversed gains after the ECB President Draghi, at a conference following the policy decision, said he did not anticipate the need to reduce rates further, but added that new facts could change the situation. This dampened "risk-on" sentiment and the euro, which had earlier fallen to $1.08, reversed to $1.11. Dollar index fell more than a percent while Gold rallied $15 to $1273 an ounce.
Oil prices fell following reports that an OPEC meeting aimed at freezing output appeared unlikely to go ahead without Iran's participation. Nymex oil settled down 45 cents at $37.84 while Brent lost 2.5% to finish at $40.05 a barrel.
US weekly jobless claims declined 18,000 to a seasonally adjusted 259,000 for the week ended March 5, the lowest reading since mid-October.
Benchmark indices could not extend Wednesday's smart rebound and ended lower by about six tenth of a percent in yesterday's trade. Sensex lost 171 points to settle at 24623 while Nifty finished at 7486, down 46 points. BSE mid-cap and small-cap indices lost 0.3% and 0.2% respectively. Except a 0.4% and 0.3% rise in BSE Metal and Basic Material indices respectively, all the sectoral indices ended in red with Capital Goods and Energy indices leading the tally, down 1.7% and 1.6% respectively.
FIIs net bought stocks worth Rs 1063 cr but net sold index futures and stock futures worth Rs 29 cr and 636 cr respectively. DIIs were net sellers to the tune of Rs 598 cr.
Rupee appreciated 14 paise to end at 67.065/$.
The Union Cabinet yesterday approved a new Hydrocarbon Exploration & Licensing Policy that aims to boost exploration & production (E&P) activity and iron out issues faced by upstream oil companies. The new policy contains several norms that will smoothen the process of licensing to exploration, by steps such as offering a uniform license for all fuels such as natural gas, crude oil or shale. Explorers will also get freedom to price petroleum products procured from hard-to-explore deepwater fields as per market rates. Further, the Cabinet also approved extending licenses of 28 small- and medium-sized oil and gas fields.
Also approved was amendment in Mines and Minerals (Development and Regulation Act to allow transfer of mining lease for captive mines, which will pave the way for merger and acquisition activities in the cement sector. Earlier, the act allowed transfer of mining lease for auctioned mines only.
Rajya Sabha yesterday passed the Real Estate Regulator (Regulation and Development) Bill, 10 years after it was tabled in the Parliament. The Bill has been drafted to protect the interest of consumers and proposes several measures for the same. With the passage of the Bill, builders will now have to quote prices based on carpet area and not super built-up. Building plans cannot be changed (now) without consent from 66% of buyers. In the case of defaults or delays, the same rate of interest will be levied for promoters as well as buyers. The Bill also seeks to establish fast track dispute resolution mechanism.
Today morning Nikkei is down a percent while Shanghai is lower by half a percent. Other Asian markets are little changed and SGX Nifty is suggesting a flattish start for our market.
As we have been mentioning, 7540 and 7550 were the bottoms made in September and December 2015 respectively and that is why we had advised booking profits in trading longs and wait for the decisive crossover of this hurdle before taking a fresh view.
The benchmark, after touching a high of 7547 in the initial trade, slipped to end at 7486, giving credence to above hypothesis.
7540-7550 continues to be immediate hurdle above which 7600, which is the immediate previous top on the weekly chart, would be the next resistance to eye. A decisive crossover of 7600 would open up the space for next big upmove as next meaningful resistance will come around 7840 where 34-week moving average is placed. 7424, the bottom made on Wednesday, is the immediate support, a breach of which would break the higher-top higher-bottom formation on the hourly chart and would pave the way for the further correction.
IIP for the month of January would be released today and is expected to show a contraction 0.15% as against contraction of 1.3% in the previous month.