NIFTY REBOUNDS FROM 7900 SUPPORT; 8085 IS THE IMMEDIATE HURDLE

NIFTY REBOUNDS FROM 7900 SUPPORT; 8085 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices gained 0.2%-0.4%, hitting fresh record highs, as investors digested housing data and kept an eye on President-elect Donald Trump's policy agenda. S & P 500 and Dow scaled 2200 and 19000 mark for the first time ever.

On Monday, Trump expanded on his policy agenda, which includes withdrawing from the Trans-Pacific Partnership (TPP). Trump described the TPP as "a potential disaster" for the U.S., adding "we will negotiate fair bilateral trade deals that bring jobs and industry back onto American shores."

Existing home sales rose to their highest annual rate since February 2007.

Dollar index inched up to 101 from 100.88. The two-year note yield held around 1.08% and the benchmark 10-year yield held near 2.31%.

US crude fell 0.4% to $48.03 a barrel while Brent gained 0.4% to $49.12.

European markets added 0.3%-1.4% with Basic Resources stocks outperforming.

AT HOME

After opening higher by nearly a percent, Sensex and Nifty gave away nearly all the gains in the first half, but recouped most of the lost ground in the later half to end higher by 0.8% and 0.9% respectively. For Sensex, this was the first positive close after six consecutive negative days while Nifty saw green after 3 red days. Sensex settled at 25961, up 196 points while Nifty added 73 points to finish at 8002. BSE mid-cap and small-cap indices gained 1.4% and 1.2% respectively. BSE Metal and Realty indices climbed 2.7% and 2.5% respectively, becoming top gainers among the sectoral indices while Capital Goods and Power indices lost 0.7% and 0.4% respectively.

FIIs net sold stocks worth Rs 693 cr but net bought index futures and stock futures worth Rs 371 cr and 1397 cr respectively. DIIs were net buyers to the tune of Rs 1075 cr.

Rupee depreciated 10 paise to end at 68.25/$.

L & T reported better-than-expected earnings. Revenue rose 8.2% y-o-y to Rs 25011 cr. Net profit soared 84% to Rs 1435 cr but was boosted by one time gain of Rs 402 cr. EBITDA (earnings before interest, tax, depreciation and amortization) grew by 7.9 percent to Rs 2,298 crore and margin was unchanged 9.2%. Consolidated order inflow increased 11% to Rs 31119 cr. With this, consolidated order book of the group stood at Rs 2.51 lakh crore, higher by 4% y-o-y. The company maintained its order inflow guidance of 15% and revenue growth forecat of 12-15% for the current financial year.

OUTLOOK

Today morning Asian markets are trading with gains of upto half a percent and SGX Nifty is suggesting about 50 points higher start for our market.

In yesterday's report we had said that 7900, the 50% retracement level of the entire 6825-8970 upmove, continues to be immediate support to eye, upon breach of which 7650, the 61.8% retracement level of this upmove, would be the next meaningful downside target. We had also said that the 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.

The benchmark, after touching a high of 8018 in the opening trade, reversed to touch a low of 7938 but bounced back again to end at 8007. A higher opening today would take it above 8050 mark today.

7900 continues to be immediate support on the way down. Immediate resistance is placed around 8085, a crossover of which would generate a buy on the hourly chart. 8180, the 38.2% retracement level of the recent 8600-7916 fall, would be the immediate upside target in that case.  Traders should exit short and go long if Nifty takes out and sustains above 8085.