NIFTY NEARLY ACHIEVES 7900 TARGET; 8100 IS THE IMMEDIATE HURDLE

NIFTY NEARLY ACHIEVES 7900 TARGET; 8100 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices gained 0.5%-0.9% yesterday to close at record highs on the back of higher oil prices.

US crude soared 4% to $47.49 a barrel and Brent added 4.4% to $48.90, both touching their highest level in three weeks,  as OPEC members seemed closer to a deal to cut output following comments from Russian President Vladimir Putin.

Dollar index eased 0.3% to 100.9. US 10-year treasury yield fell to 2.33%.

European markets gained upto 0.6%. ECB President Draghi, in his appearance before the European Parliament defended the bank's actions to date and suggested that the ECB must continue with its current level of monetary support in order to help inflation grow.

AT HOME

Market mayhem continued as Sensex and Nifty plunged 1.5% and 1.8% respectively in today's trade to close at the lowest level since 24th May, 2016. Sensex lost 385 points to settle at 25765 while Nifty finished at 7929, down 145 points. BSE mid-cap and small-cap indices tumbled 2.8% and 3.2% respectively. All the BSE sectoral indices ended in red with Realty index leading the losses, down 4.7%, followed by 3.3% each cut in Metal and Auto indices.

FIIs net sold stocks worth Rs 1311 cr but net bought index futures and stock futures worth Rs 1170 cr and 684 cr respectively. DIIs were net buyers to the tune of Rs 1211 cr.

Rupee depreciated 3 paise to end at 68.16/$, the weakest finish since Feb 29.

Bringing some relief for banks and non-banking finance companies (NBFCs) from demonetisation, the Reserve Bank has relaxed certain asset classification and provisioning norms in certain cases. RBI has decided to allow banks 60 more days for recognition of loans as standard in certain cases. The revised norm is applicable for loans payable between November 1 and December 31.  Small borrowers who have been unable to pay back loans will be given additional two months to pay back dues to banks.

OUTLOOK

Today morning, Nikkei is trading marginally lower owing to a 6.9 magnitude earthquake that struck off the coast of Fukushima prefecture. Other Asian markets are trading with gains of upto 0.7% and SGX Nifty is suggesting about 40 points higher start for our market.

For past couple of days we had been mentioning that 8000, the bottom made on 9th November, also coincided with 34-month moving average, and hence was an important support to eye and that upon breach of 8000, next support levels to eye would be 7900 and 7650, where the 50% and 61.8% retracement levels of 6825-8970 upmove are placed.

The benchmark broke 8000 support yesterday and plunged all the way to 7916 before closing at 7929.

7900 continues to be immediate support to eye upon breach of which 7650, as mentioned above, would be the next meaningful downside target.

Immediate resistance on the hourly chart has moved lower to 8100, a crossover of which is required to generate a buy on the hourly chart and pave the way for further upmove. 8260 and 8340, the 50% and 61.8% retracement levels of the recent 8600-7916 fall, would be the upside targets if that happens.

L&T will report its quarterly earnings today.