NIFTY CLIMBS THE MOST IN 3-½ MONTHS; STAY LONG WITH THE STOP LOSS OF 8030

NIFTY CLIMBS THE MOST IN 3-½ MONTHS; STAY LONG WITH THE STOP LOSS OF 8030

WORLD MARKETS                             

US indices climbed between 0.5%-0.7% yesterday, with the Dow and S & P 500 hitting fresh all-time high as markets continued to relish the Federal Reserve's renewed vow to keep benchmark rates low.

On the data front, the number of Americans filing for jobless benefits dropped to a two-month low and separately, housing starts declined in August. The Philadelphia Federal Reserve's index of factory activity  decelerated in September, but its employment component rose to its highest level since the middle of 2011.

Except a flattish Italy, European markets gained between 0.6%-1.4% after the ECB announced a new rotating voting system that raised hopes for euro zone quantitative easing. Italy fared the worst after the International Monetary Fund cuts it growth outlook.

The new rotation system for the ECB's Governing Council means Jens Weidmann, the governor of the German Bundesbank, will sit out the council meetings in May and October next year. Weidmann has traditionally been critical of ECB aggressive stimulus measures, so his prospective absence increased market speculation the ECB might yet launch a QE program as early as May. Nymex crude fell 1.4% to $93.1 a barrel; Gold declined 0.7% to $1227 an ounce.

Late yesterday, the People's Bank of China cut the 14-day repo rate by 20 basis points to 3.5%. This comes days after the PBOC was believed to have pumped $81 billion into China's top five banks. News reports also said the PBOC injected $1.3 billion into money markets this week.

AT HOME

It was a day of a dramatic comeback by bulls as benchmark indices soared just under two percent, registering the highest gain in 3½-months. Sensex surged 481 points to settle at 27112 while Nifty finished at 8115, up 139 points. BSE mid-cap and small-cap indices gained 1.8% and 2.7% respectively. All the BSE sectoral indices closed in green with Realty and Consumer Durable indices leading the tally, putting on 4.6% and 3.2% respectively. 46 out of 50 Nifty stocks closed higher.

FIIs net sold stocks worth Rs 10 cr but net bought index futures and stock futures worth Rs 645 cr and 81 cr respectively. DIIs were net buyers to the tune of Rs 84 cr.

Rupee appreciated 9 paise to close at 60.83/$.

India and China yesterday signed a five-year trade and economic co-operation pact and a railway co-operation pact.

The Supreme Court yesterday refused to stay a possible gas price hike and said that the government needs to clarify the implementation of the Rangarajan Panel's recommendations. The Centre is expected to take a decision by the end of this month.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of half a percent and SGX Nifty is suggesting a marginally higher opening for our market.

In yesterday's report we had mentioned that 7900-8060 is the immediate range, a breach of which, on either side, is required to take a fresh view on Nifty. The benchmark surged 139 points to settle at  8115, taking out the 8060 hurdle with ease and generating a fresh buy on the hourly chart.

8180, the all-time high made last week, is the immediate target on the way up. Immediate support on the hourly chart is placed at 8030, with the stop loss of which trading longs should be held on to.

Global markets will watch out for the results of Scotland's independence referendum, expected later in the day. The latest polls indicated the "No" vote led by 54%, which boosted sterling to a two-week high against the U.S. dollar in early Asian trade.