US EQUITIES GET FED, OIL BOOST; NIFTY REBOUNDS FROM 7950 SUPPORT

US EQUITIES GET FED, OIL BOOST; NIFTY REBOUNDS FROM 7950 SUPPORT

WORLD MARKETS

US indices surged between 1.7%-2.1% with the Dow marking its best session of the year, as energy sector rallied on rebound in oil and the Federal Reserve's pledge to be patient in raising interest rates.

Federal Reserve retained the phrase "considerable time" in its policy statement, and also introduced another word, "patient," as the central bank readies to raise interest rates next year. Addressing a televised news conference, Fed Chair Janet Yellen said the new language was not a change in policy, and that a rate increase was unlikely for "at least the next couple of meetings."

A rebound in oil prices, after U.S. data showed falling crude inventories, also boosted the sentiment. Nymex oil rose 54 cents to $56.47 a barrel. Brent rose $1.2 to $61.2.

Russia yesterday again attempted to halt a rout in the ruble, which climbed after the Finance Ministry said it had started selling its foreign currency stock.

European markets ended mixed with FTSE and CAC rising while DAX, Italy and IBEX ended lower.

AT HOME

After falling nearly a percent and third in the first hour, benchmark indices recovered through the session to finally end lower by 0.3%-0.5%, extending the losing streak to fifth straight session. Sensex lost 71 points to settle at 26710 while Nifty finished at 8030, down 38 points. BSE mid-cap and small-cap indices lost 0.6% and 1.1% respectively. BSE Healthcare and Realty indices led the losers among the sectoral indices, giving away 2% and 1.6% respectively while Metal and Oil & Gas indices gained 1.1% and 0.7% respectively.

FIIs net sold stocks and index futures worth Rs 1636 cr and 494 cr respectively but net bought stock futures worth Rs 4 cr. DIIs were net buyers to the tune of Rs 1424 cr.

Rupee depreciated 8 paise to end at 63.61/$.

The Lok Sabha yesterday passed the Companies (Amendment) Bill, 2014, after Corporate Affairs Minister Arun Jaitley told the house that some of the original provisions were only posing hurdles to doing business in the country.

In a big step forward for the long-delayed goods and services tax (GST), the Union Cabinet gave its assent yesterday to the constitutional amendment bill that needs to be approved before the levy can become reality, with the Centre having made significant concession to get states on board. The bill is likely to be introduced in Parliament on Thursday and the government hopes to roll out GST on April 1, 2016, replacing a range of indirect taxes levied by the Centre, states and local bodies with one unifying levy.

OUTLOOK

Today morning, Nikkei is up about 2.5%, other Asian markets are trading with gains of upto a percent and SGX Nifty is suggesting about 75 points higher opening for our market.

In yesterday's report we had mentioned that while Nifty has achieved the downside target of 8070, the view will continue to be bearish until we see a resumption of the higher-top higher-bottom formation. We had also mentioned 7950 as the next support where a trendline adjoining recent bottoms on the weekly chart was placed.

Nifty, in the first hour of trade, touched a low of 7961, nearly achieving the target mentioned above, from where it rebounded smartly to end at 8030.

7950 continues to be important immediate support, a breach of which would open up the possibility of the retest of the 7724 bottom made in October.

On the way up, immediate resistance on the hourly chart has moved lower to 8230, a crossover of which is required to generate a buy on the hourly chart and put bulls in the dominating position. Till then every rally should be taken with a pinch of a salt.