CHINA, GREECE JITTERS SPOOK WORLD EQUITIES; NIFTY ACHIEVES 8350 TARGET

CHINA, GREECE JITTERS SPOOK WORLD EQUITIES; NIFTY ACHIEVES 8350 TARGET

WORLD MARKETS

After plunging more than a percent in the initial trade, US indices recovered most of the ground through the remaining session to end mixed. Dow ended lower by 0.3%, S & P closed flat while Nasdaq gained 0.5%.

The initial fall was attributed to global growth concerns, political uncertainty in Greece and a selloff in Chinese shares.

Earlier China's benchmark index fell by as much as 6%. The sell-off was attributed to profit-taking, concerns about growth prospects in 2015 and newly announced corporate bond market restrictions.

Greek stocks closed nearly 13% lower, after the country's president shocked investors by announcing a snap presidential vote for next week, potentially, setting the scene for snap elections in early 2015.

Back in the US, whole inventories rose 0.4% in October versus expectations for a 0.1% gain. Another report had small business optimism rising in November to its highest level in almost eight years.

European markets nosedived 2%-3%.

Oil bounced back from a five-year low, with Nymex crude rising 1.2% to $63.8 a barrel and Brent ending 60 cents higher at $66.8; Gold jumped 3.1% to $1232 an ounce.

                                                             

AT HOME

Monday’s Sell-off extended as benchmark indices plunged another percent and fifth in yesterday’s trade to end at 1-month low. Sensex sank 322 points to settle at 27797 while Nifty finished at 8340, down 97 points. BSE mid-cap and small-cap indices tumbled 1.6% each. All the BSE sectoral indices ended in red with Power and Metal indices leading the tally, giving away 2.8% and 2.7% respectively.

FIIs net sold stocks and stock futures worth Rs 222 cr and 802 cr respectively but net bought index futures worth Rs 210 cr. DIIs were net sellers to the tune of Rs 345 cr.

Rupee depreciated 5 paise to end at 61.88/$.

OUTLOOK

China's November CPI has eased to 1.4% from 1.6% in October, marking the lowest reading since November 2009 and adding to concerns of cooling activity. PPI fell for the 33rd straight month, down 2.7% y-o-y, worse than the 2.2% drop in October.

Nikkei is down about a percent and half as the Yen has rebounded back into 119 area, off Monday's seven-year low. Other Asian markets are trading flat to modestly lower. SGX Nifty is suggesting about 35 points lower opening for our market.

Just to reiterate, for whole of last week, we had been cautioning that after a steep run-up, Nifty is showing signs of fatigue. We had also mentioned that a breach of 8500 would generate a sell on the hourly chart and would pave the way for the correction to 8430 and then to 8350.

The benchmark plunged to 8330 yesterday before ending at 8340, achieving the target mentioned above and vindicating our view.

The benchmark continues to be in the sell mode on the hourly chart. Next support to eye is 8282, which is the 38.2% retracement level of the entire 7724-8627 upmove. 8430, the erstwhile support, would now act as the immediate resistance, with the stop loss of which trading shorts can be held on to.