PLUNGING OIL, EUROPEAN WORRIES PULL WORLD EQUITIES LOWER

PLUNGING OIL, EUROPEAN WORRIES PULL WORLD EQUITIES LOWER

WORLD MARKETS

US indices plunged 1.6%-1.9% yesterday, with the S & P 500 extending losing streak to fourth session, as energy stocks tracked steep fall in oil and worries over Greece and European economy weighed on the sentiment.

U.S. automakers reported strong domestic sales in December, with General Motors surpassing estimates and posting a 19% gain for the month.

Nymex oil nosedived $2.65 or 5% to 50.04 a barrel, the lowest level since April 2009. Brent fell $3 to $53.

Greek Prime Minister Antonis Samaras said the current election could result in an exit from the European Union should the Syriza party win, with the comments pushing the euro to a near nine-year low.

European markets tumbled 2%-6%, with Greece leading the tally, followed by Spain and Italy. Inflation in Germany fell to a five-year low of 0.1% in December from 0.5% in December.

                                                             

AT HOME

After rising more than half a percent in the initial trade, benchmark indices saw a steep profit booking through rest of the session to end lower by  a fifth of a percent, breaking six-day winning streak. Sensex settled at 27842, down 46 points while Nifty finished at 8378, down 17 points. BSE mid-cap and small-cap indices however ended higher by 0.2% and 0.1% respectively. BSE Auto and Consumer Durable indices gained 1.1% each, becoming top gainers among the sectoral indices while IT and Teck indices were the top losers, giving away 1% each.

FIIs net bought stocks worth Rs 472 cr but net sold index futures and stock futures worth Rs 605 cr and 26 cr respectively. DIIs were net sellers to the tune of Rs 576 cr.

Rupee fell 13 paise to end at 63.41/$.

The Union Cabinet yesterday approved the largest ever telecom spectrum auction that is targeted to fetch at least Rs 64,840 crore from its sale next month. The Cabinet also approved an ordinance for auction of iron ore and other minerals, yet again opting the emergency route that was adopted for coal, insurance and land acquisition reforms.

OUTLOOK

China's HSBC Services PMI for December has come in at 53.4, which is up from 53 in November and is a 3-month high.

Barring a modestly higher Shanghai, other Asian markets are trading with cuts ranging from 0.5%-2% and SGX Nifty is suggesting about 65 points lower opening for our market.

In yesterday's report we had mentioned that the near term view in Nifty has turned bullish as the benchmark has closed above the 61.8% retracement level of the 8627-7961 fall and also regained higher-top higher-bottom formation on the daily chart.

We had also mentioned that 8500 is the immediate target above which 8627 would be the next target and had advised staying long with the stop loss of 8280.

Nifty, yesterday, after touching a high of 8446 in the initial trade, reversed to end at 8378 and is set to open with a downward gap today, which will take it close to the immediate support on the hourly chart, which is now placed around 8290. A sustained trading below 8290 would generate a sell on the hourly chart and would pave the way for the further correction.

On the way up, 8446, the top made yesterday, would now act as the immediate resistance, a crossover of which would be required to take the benchmark to higher levels.

Traders are advised to keep a stop loss of 8290 in trading longs.