NIFTY TUMBLES 2% FOR THE WEEK; VINDICATES OUR CAUTION

NIFTY TUMBLES 2% FOR THE WEEK; VINDICATES OUR CAUTION

WORLD MARKETS                             

US indices ended with gains of upto 0.3% on Friday, closing well off session high, as strengthening Yen offset positive impact arising out of a rally in oil.

WTI crude climbed $2.46 or 6.6% to $39.72 a barrel, in its biggest daily gain since Feb. 12. The oil rig count fell by eight to its lowest since 2009.

Gold rose $6.30 to $1244 an ounce.

In Europe, Italy soared 4% while other markets gained 1%-1.6%. Italian market was boosted by the news that the country's government is working on plans to help rescue four small banks in the country. Positive trade data from Germany also boosted the sentiment.

For the week, US indices lost a percent and quarter, marking the worst weekly fall since February.  Yen appreciated more than 3% to settle near 108 per dollar. US oil gained 8%. Gold rose 1.7% for its second-straight week of gains. In Europe, while FTSE gained a percent, CAC and DAX lost 0.4% and 1.8% respectively.

AT HOME

Benchmark indices ended little changed after a rangebound trade on Friday. Sensex settled at 24674, down 12 points while Nifty added 9 points to finish at 7555. BSE mid-cap and small-cap indices however gained 0.6% each. BSE Power and Realty indices climbed 1.6% and 1.4% respectively to become top gainers among the sectoral indices while IT and Teck indices were the top losers, down 0.8% and 0.7% respectively.

FIIs net bought stocks worth Rs 180 cr but net sold index futures and stock futures worth Rs 897 cr and 308 cr respectively. DIIs were net sellers to the tune of Rs 159 cr.

Currency market was shut on Friday for Gudi Padwa.

For the week, Sensex and Nifty lost 2.4% and 2% respectively, with Nifty suffering the worst weekly fall since the week ended 26th February.

OUTLOOK

China's March CPI has risen by 2.3% y-o-y Vs expectation of an uptick of 2.5% but in-line with February’s 2.3% reading. PPI declined on-year for the 49th consecutive month, down 4.3%, but at a slower rate of decline than in February.

Today morning, Shanghai is up nearly a percent, Nikkei is down more than a percent and half, other Asian markets are trading with  cuts of upto 0.6% and SGX Nifty is suggesting about 15 points lower opening for our market.

For past couple of sessions we have been cautious on Nifty as it reached near important 34-week moving average hurdle placed around 7770 after a steep-run up since the budget day. We had also advised opening short position after a sustained trading below 7666, which was the immediate support on the hourly chart, for the initial target of 7582, below which we have been working with next target of 34-DMA.

The benchmark, since then has moved lower and touched a low of 7527 on Friday, vindicating our view.

34-DMA has now moved up to around 7470 and continues to be important support to eye. Immediate resistance on the hourly chart has move lower to 7650, which should serve as the stop loss for short positions.