PROFIT BOOKING SETS IN AFTER NEARLY ACHIEVING 9000 TARGET; STAY SHORT WITH THE STOP LOSS OF 8870

PROFIT BOOKING SETS IN AFTER NEARLY ACHIEVING 9000 TARGET; STAY SHORT WITH THE STOP LOSS OF 8870

WORLD MARKETS                             

US indices tumbled between 1%-1.4% on Friday, after data showed U.S. economic growth slowed sharply in the fourth quarter.

The growth came in at 2.6%, sharply lower than third quarter's 5% figure and was also lower than the estimated 3% rate.

U.S. consumer sentiment climbed in January to its highest in 11 years.

Nymex crude climbed $3.71 or 8% to $48.24 a barrel, registering best day since June 2012 after data showed U.S. drillers made further cuts to capital expenditures and took more rigs offline. Brent settled up $3.86 at $52.99. Gold gained $24 or 2% to $1278 an ounce.

Russia's central bank cut its key interest rate to 15 percent, just one month after a surprise hike, amid calls from government officials and business leaders for a cut to stimulate growth in the country's sanctions-hit economy.

European markets fell between 0.4%-1% with investors reacting to earnings and euro zone inflation and unemployment reports. Eurozone inflation came in at negative 0.6% in January, below the 0.5% forecast and worse than December's 0.2% fall. Eurozone unemployment fell to 11.4 percent in December, down from 11.5 percent in November and marking the lowest rate recorded in the region since mid-2012.

Greek government said it would not seek an extension of the bailout program with the European Union and the International Monetary Fund.

For the week, US indices lost between 2.6%-2.9%. European markets, except a 0.4% gain in DAX, lost between 0.8%-1.7%.

AT HOME

After opening higher by nearly half a percent, benchmark indices saw a sustained downward move through the session and finally ended with steep cuts of more than a percent and half, with Nifty breaking 10-day winning streak. Sensex plunged 500 points to settle at 29183 while Nifty finished at 8809, down 143 points. BSE mid-cap and small-cap indices lost 0.3% and 0.4% respectively. BSE Bankex tumbled 3.1%, becoming top loser among the sectoral indices, followed by 1.8% cut in Consumer Durable index. Realty index climbed 2.2%, becoming top gainer, followed by 0.9% rise in Power index.

Rupee ended unchanged at 61.86/$.

FIIs net sold stocks and stock futures worth Rs 772 cr and 1608 cr respectively but net sold index futures worth Rs 72 cr. DIIs were net sellers to the tune of Rs 38 cr.

For the week, Sensex and Nifty lost 0.3% each.

HCL Tech surged after earnings surpassed street expectations on every parameter and that came along with 1:1 bonus. Net profit rose 2.3% q-o-q to Rs 1915 cr while revenues rose 6.3% to Rs 9283 cr. The expected figures were Rs 1770 cr and 8950 cr respectively. Dollar revenue rose 4% to Rs 1.49 bn as against expected figure of 1.477 bn.

BoB plunged after reporting 68% dip in net profit at Rs 334 cr. NII grew 7.5% to Rs 3286 cr. Provisions for bad loans jumped 66% y-o-y to Rs 1262 cr. Asset quality also deteriorated with gross NPAs rising 53 bps to 3.85% while net NPAs climbed 37 bps to 2.11%.

ICICI Bank reported lower-than-estimated 14% rise in net profit at Rs 2889 cr. NII grew 13.9% to Rs 4812 cr. Asset quality worsened during the quarter as gross NPAs rose by 28 bps q-o-q to 3.4% and net NPAs rose 18 bps to 1.27%.

Tech Mahindra beat street expectations on topline and bottomline front. Consolidated profit jumped 11.9% sequentially to Rs 805 cr. while revenue rose 4.8% to Rs 5752 cr. Dollar revenue grew 2.7% to USD 924 mn. EBIDTA margin expanded 26 bps to 17.66% sequentially. The company also approved issued of 1:1 bonus and 10:5 stock split.

The central statistics office (CSO) has come out with a new series of national accounts with 2011-12 as base year for computing economic growth rate. Post the revision, FY14 GDP growth stands at 6.9 percent (from 4.7 percent) and FY13 at 5.1 percent. These changes are done once in five years to keep pace with the changes in the economy. From now on, CSO will measure growth by gross value-added at basic prices, instead of by GDP at factor cost.

OUTLOOK

Data released yesterday showed that China's official manufacturing PMI slipped to 49.8 in January as against expected reading of 50.2, unexpectedly shrinking for the first time since September 2012. Data coming out today is showing that the HSBC version of the PMI has come in at 49.7 as against flash estimate of 49.8.

Today, Asian markets are trading mixed and SGX Nifty is suggesting about 50 points lower opening for our market.

Nifty, on Friday, after almost achieving the big 9000 target that we had been working with since 8446 was crossed on 15th January, saw a severe profit booking and settled 143 points lower at 8809. The benchmark also broke the immediate support of 8850, generating a sell on the hourly chart after a long time.

The trendline adjoining recent bottoms on the daily chart presents a support around 8650 and that would be the immediate downside target. Immediate resistance on the hourly chart is placed at 8870, with the stop loss of which short positions can be held on to.

India's HSBC Manufacturing PMI for January would be released today. In December, the gauge had climbed to a two-year high of 54.5, up from 53.3 in November.

Auto companies will reveal their January sales figures.