NIFTY CLIMBS THE MOST IN 9-MONTHS ON RBI SURPRISE; STAY LONG WITH THE STOP LOSS OF 8380

NIFTY CLIMBS THE MOST IN 9-MONTHS ON RBI SURPRISE; STAY LONG WITH THE STOP LOSS OF 8380

WORLD MARKETS

US indices fell between 0.6%-1.5%, extending the losing streak to fifth straight day, as large US banks reported disappointing results, oil resumed fall and Switzerland's central bank unexpectedly gave up its minimum exchange rate.

Bank of America dropped after the bank reported a 14% fall in quarterly profit; Citigroup also declined as it posted a slim fourth-quarter profit.

A measure of manufacturing in the New York region climbed to 9.95, above estimates. Other reports had wholesale prices falling 0.3% in December, and a larger-than-expected number filing for jobless benefits last week, up by 19,000 to 316,000.

Swiss National bank shocked markets by abandoning its currency cap against the euro. Swiss stocks fell by more than 10% at one point on the news, and the Swiss franc gained up to 30% against the euro. The appreciation of the franc will make Swiss exports much more expensive.

Nymex crude fell 4.6% or $2.23 to settle at $46.25 a barrel while Brent dropped nearly $1 to around $48. Gold climbed 2.5% to $1265 an ounce.

European markets climbed between 1.4%-2.4%.

                                                             

AT HOME

Delighted by the unexpected rate cut by the RBI, benchmark indices soared 2.6% each, registering the largest gain since 9th May 2014 and closing at the highest level since 5th December 2014. Sensex surged 729 point to settle at 28076 while Nifty finished at 8494, up 217 points. BSE mid-cap and small-cap indices gained 1.2% and 1% respectively. All the BSE sectoral indices ended in green with the Realty index and Bankex leading the tally, putting on 8% and 3.3% respectively.

In a surprise move RBI cut the repo rate by 25 bps and signaled it could cut further, amid signs of cooling inflation and what it said was a government commitment to contain the fiscal deficit.

FIIs net bought stocks and index futures worth Rs 1738 cr and 3897 cr respectively but net sold stock futures worth Rs 290 cr. DIIs were net sellers to the tune of Rs 527 cr.

Rupee appreciated 13 paise to end at 62.05/$, marking a two-month high.

India's trade deficit for December touched a 10-month low at $9.43 bn as against $16.8 bn in November. This was mainly on account of imports declining to $34.83 bn from $42.82 bn. Exports came in at $25.4 bn as against $26 bn.

TCS third quarter net profit grew 2.94% q-o-q to Rs 5444 cr, coming in slightly lower than expectations while revenue and operational performance was in line. Revenue rose 2.87% to Rs 24501 cr and dollar revenue increased half a percent to $3.9 bn.

OUTLOOK

Today morning Nikkei is down nearly 2% on the back of stronger Yen; other Asian markets, except a modestly higher Shanghai, are trading with cuts of 0.5%-1% and SGX Nifty is suggesting a flattish start for our market.

Ever since Nifty broke out of the 8300 hurdle on the hourly chart, we have been advising holding on to trading longs with a trailing stop loss.

In yesterday's session Nifty closed above 8446 where the previous top made on 5th January as well as the upper band of bollinger were placed, there by staging a breakout. While 8627, the record high made on 4th December would be the immediate target, the triangle breakout on the daily chart projects a target of about 9000, which can materialise over next 6-8 weeks.

On the way down, 8380, the bottom made yesterday, would be the immediate support, with the stop loss of which trading longs should be held on to.

Reliance Industries, Axis Bank and Wipro will report their quarterly earnings today.