NIFTY EXTENDS FALL TO SEVENTH STRAIGHT DAY; DELHI POLL RESULTS IN FOCUS

NIFTY EXTENDS FALL TO SEVENTH STRAIGHT DAY; DELHI POLL RESULTS IN FOCUS

WORLD MARKETS                             

US indices fell between 0.4%-0.5% yesterday as concerns about Greece continued to weigh and the crisis in Ukraine re-escalated.

Greece's new leftist Prime Minister Alexis Tsipras, in his election pledge on Sunday, said that he would end the country's "cruel" austerity program and ruled out an extension of international bailout. Starting Wednesday, Greek banks will not be able to use Greek government bonds as collateral in daily refinancing operations with the European Central Bank.

German Chancellor Angela Merkel met with President Barack Obama in Washington yesterday to discuss a solution to the crisis in Ukraine, where violence between pro-Russian separatists and the Ukraine military has intensified, forcing many civilians in the east of the country to flee their homes.

Nymex oil climbed $1.17 or 2.3% to $52.86 a barrel after the Organization of the Petroleum Exporting Countries (OPEC) hiked its demand forecast for 2015, predicting that low prices would help boost demand later in the year

Over the weekend, China reported that exports fell 3.3% in January, while imports slumped by 19.9%, both missing expectations by a wide margin, and resulting in a record monthly trade surplus of $60 billion.

European markets fell between 0.2%-2%. Greece plunged 5%.

AT HOME

Benchmark indices, after a gap down opening, extended the fall through rest of the session to end with deep cuts of more than a percent and half, extending the losing streak to seventh straight day. Sensex plunged 491 points to settle at 28227 while Nifty finished at 8526, down 135 points. BSE mid-cap and small-cap indices lost 1.4% and 1.5% respectively. All the BSE sectoral indices ended in red with Capital Goods index leading the tally, falling 4.3%, followed by 2.7% cut in Realty index.

LT collapsed after December quarter earnings disappointed with profit falling 14.6% y-o-y to Rs 1060 cr while revenues rose 4.2% to Rs 14995 cr. Expected figures were Rs 1255 cr and Rs 15973 cr. Operating profit dropped 6.3% to Rs 1569 cr and margin declined 110 bps to 10.5%, as against expectation of Rs 1826 cr and 11.4% respectively. The company also lowered order flow guidance to 15-20% from 20%.

FIIs net sold stocks, index futures and stock futures worth Rs 660 cr, 1793 cr and 198 cr respectively. DIIs were net buyers to the tune of Rs 470 cr.

Rupee plunged 47 paise to end at four-week low of 62.16/$.

Government yesterday released GDP growth data according to new method yesterday according to which GDP is expected to grow at 7.4% this fiscal compared to 6.9% in the previous year. New method calculates GDP at market price instead of factor cost. The government has also moved the base from 2005-06 to 2011-12 to reflect structural changes in the economy. Under the new method, GDP growth in the first three quarters stood at 6.5%, 8.2% and 7.5% respectively.

OUTLOOK

China's CPI for January is up 0.3% month-on-month and 0.8% y-o-y, which is lower than the estimates if 1% y-o-y growth. PPI is down 1.1% m-o-m and 4.3% y-o-y as against estimated 3.8% fall y-o-y.

Asian markets are trading mixed with modest changes but SGX Nifty is suggesting about 50 points lower opening for our market.

Just to reiterate we, have maintained negative bias on Nifty ever since 8850, the immediate support on the hourly chart, was broken on 30th January and have been advising holding on to short positions with a trailing stop loss. We had given an initial downside target of 8640, which was the 38.2% retracement level of the 8065-8997 upmove seen in January.

In yesterday's report we had mentioned that below 8640, 8530-8500 would be the next support area where 8530 is the 50% retracement level of the 8065-8997 upmove while 8500 is where the 34-DMA is placed.

The benchmark plunged to 8526 yesterday and is set to open further lower today which would see even 34-DMA being tested.

Next support to eye would be 8420, which is the 61.8% retracement level of the 8065-8997 upmove.

Immediate resistance on the hourly chart has moved lower to 8700, with the stop loss of which trading shorts can be held on to.

Counting of votes for Delhi assembly elections will take place today.