NIFTY SUFFERS LARGEST FALL IN A MONTH; 8340 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY SUFFERS LARGEST FALL IN A MONTH; 8340 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS

Dow and S & P 500 ended marginally lower after taking into stride minutes from the Fed's last policy meeting. Nasdaq lost 0.6%.

Minutes showed that Fed officials are worried that inflation may stay low "for quite some time" despite the central bank's multi-trillion dollar effort to jump starts the economy. They also discussed how they should go about raising interest rates, and expressed some worry over market volatility during the process.

Housing starts unexpectedly fell in October, down 2.8%, while permits surged to their highest in more than six years. Mortgage applications unexpectedly rose last week.

European markets ended mixed with modest changes. The Bank of England published its policy minutes that revealed the Bank's rate-setting committee was divided on the risks facing the U.K.'s economy.

Earlier, the Bank of Japan kept its massive stimulus program intact, in the wake of data that showed the economy in recession and ahead of snap elections expected next month.

Nymex crude fell 3 cents to $74.6 a barrel; gold fell $3.2 to $1194 an ounce.

AT HOME

It was a day of weakness as benchmark indices, after a positive start, saw a sustained downward move through the session to end lower by half a percent. This was the largest fall for both the indices since 16^th October. Sensex slipped 130 points to settle at 28033 while Nifty finished at 8382, down 44 points. BSE mid-cap and small-cap indices lost 0.6% each. BSE Metal and Power indices lost the most among the sectoral indices, giving away 2.1% and 1.8% respectively while IT and Teck indices gained 0.2% and 0.1% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 72 cr, 106 cr and 66 cr respectively. DIIs were net sellers to the tune of Rs 491 cr.

Rupee depreciated 22 paise to close at 61.96/$, marking a 34-week low.

The Coal Ministry yesterday issued much-awaited draft guidelines for e-auction of 74 coal blocks of the 200 odd coal blocks that had been cancelled by the Supreme Court. Out of these, 32 will be new blocks and 42 blocks are currently operational. The reserve price will be announced by late December and coal blocks could be awarded by March 16.

SEBI yesterday cleared repealing of the two decade old insider trading rules with new prohibition of insider trading (PIT) regulations and amending the delisting regulations.

OUTLOOK

China's November HSBC flash manufacturing PMI has come in at 50, showing a slowing down from October reading of 50.4 and marking a six-month low.

In Japan, exports rose 9.6% in October, above the 4.5% rise forecast and following a 6.9% rise in September. Imports, meanwhile, rose 2.7% from the year-ago period, below expectations of a 3.4% rise and after rising 6.2% in September. This brought the trade deficit to 710 billion yen, better than expectations of a 1.05 trillion yen deficit.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a flattish start for our market.

We have been advising holding on to trading long with a trailing stop loss ever since 7928 hurdle was taken out on 21st October. In yesterday’s report we had asked trailing stop loss to 8340. Nifty, after touching a low of 8360, rebounded somewhat to end at 8382.

8340 continues to be immediate support, a breach of which will break the higher-top higher-bottom formation on the daily chart and would pave the way for the further correction till about 8150-8200.