NIFTY BREAKS OUT AFTER A CONSOLIDATION; STAY LONG WITH THE STOP LOSS OF 8280

NIFTY BREAKS OUT AFTER A CONSOLIDATION; STAY LONG WITH THE STOP LOSS OF 8280

WORLD MARKETS

Dow and S & P 500 ended little changed on Friday while Nasdaq lost 0.2%.

ISM manufacturing index came in at 55.5 in December, below expectations of a decline to 57.6 from 58.7 in November; separately, construction spending dropped 0.3% in November, versus a projected 0.3% gain.

Dollar index hit a nine-year high of 91.15 and the Euro slid to an almost nine-year low at 1.1996/$ after ECB chief Draghi, in an interview, said that he couldn't exclude the risk of deflation, stroking speculation that a full-scale quantitative easing is coming. Political situation in Greece also weighed on the currency.

Main European markets ended with cuts of 0.3%-0.5% while Italy and Spain gained about two third of a percent. Markit's final manufacturing PMI for the euro zone read 50.6 in December, slightly below the flash estimate.

Nymex oil fell 1.1% to $52.7 a barrel while Brent dipped 91 cents to $56.42 a barrel.

For the week, US indices lost between 1.2%-1.7% while European markets were down 0.4%-1.6%.

                                                             

AT HOME

Benchmark indices broke out after five days of consolidation, gaining nearly a percent and half in today's trade to close at the highest level since 8th December. Sensex surged 380 points to settle at 27888 while Nifty finished at 8395, up 111 points. BSE mid-cap and small-cap indices gained 0.9% and 0.7% respectively. All the BSE sectoral indices ended in green with BSE Capital Goods index and Bankex leading the tally, putting on 1.7% each.

India's HSBC manufacturing PMI for December climbed to a two-year high of 54.5, up from 53.3 in November.

FIIs net bought stocks, index futures and stock futures worth Rs 260 cr, 452 cr and 200 cr respectively. DIIs were net buyers to the tune of Rs 70 cr.

Rupee appreciated 7 paise to end at 63.28/$.

For the week, Sensex and Nifty gained 2.4% each.

At the two day meet of public sector financial institutions called "Gyan Sangam", government stayed away from announcing any immediate major decision, either with respect to government control on banks, recapitalization or, importantly, consolidation but laid out a broad agenda for change.

Among the key commitments PSU banks made were to reorient strategies to enable small ones to focus on niche capabilities, implement steps to shore up talent, use technology in a greater way, strengthen risk management and work more closely with non-bank channels such as payment management systems or bank correspondents. At the same time, banks urged the government to provide them greater leeway by considering transferring its stake to an independent bank investment committee run by professionals, and in the long run look to reducing its stake below 51 percent – key recommendations of the PJ Nayak committee. Bank chiefs also stressed upon the need for greater freedom in hiring decisions, lesser scrutiny from vigilance agencies, stronger debt recovery laws and fewer interference from governments in the form of market-distorting debt waivers or interest rate caps.

OUTLOOK

Today morning barring a 1.5% higher Shanghai, other Asian markets are trading with cuts of 0.5%-1% and SGX Nifty is suggesting about 20 points lower opening for our market.

On Friday, Nifty soared 111 points to end at 8395, decisively closing above the 8373 resistance, which was the 61.8% retracement level of the entire 8627-7961 fall. The benchmark has also regained the higher-top higher-bottom formation on the daily chart, turning the near term view decisively bullish.

8500, where the uppder band of bollinger on the daily chart is placed, would be the immediate target to eye above which 8627 would be the ultimate target for this upmove.

Immediate support on the hourly chart is placed around 8280, with the stop loss of which trading longs should be held on to.