US MARKETS SURGE ON OIL REBOUND, GREEK NEWS; RBI IN FOCUS AT HOME

US MARKETS SURGE ON OIL REBOUND, GREEK NEWS; RBI IN FOCUS AT HOME

WORLD MARKETS

US indices, after starting in the negative territory, climbed nearly 2% from the bottom of the day to end with gains raging from 0.9%-1.3% on encouraging news from the Eurozone and stronger oil prices.

Media reports suggested that Greece's financial minister revealed a plan to end confrontation with its creditors.

Nymex crude gained $1.33 to $49.57 a barrel, its highest in nearly a month while Brent gained $1.44 to $54.50 a barrel.

Back in the US, ISM manufacturing index hit 53.5 in January 2015, below expectations of 54.5, the weakest reading since January last year. U.S. consumer spending fell 0.3% in December, recording its biggest decline since late 2009, with households appearing to save the extra cash from cheaper gasoline, which could support future consumption.

In Europe, FTSE, CAC and DAX gained between 0.5%-1.2% while Italy and Spain ended lower. Eurozone final manufacturing PMI for January came in at 51, which was in line with a previous estimate.

                                                             

AT HOME

After falling nearly two third of a percent in the morning trade, benchmark indices recovered in the noon trade to end just modestly lower. Sensex lost 61 points to settle at 29122 while Nifty finished at 8797, down 12 points. BSE mid-cap and small-cap indices however climbed 0.6% and 1.1% respectively. BSE FMCG and Oil & Gas indices lost the most among the sectoral indices, giving away 1.8% and 0.5% respectively while Capital Goods and IT indices gained 1.2% and 1% respectively, becoming top gainers.

FIIs net sold stocks, index futures and stock futures worth Rs 630 cr, 3 cr and 1887 cr respectively. DIIs were net sellers to the tune of Rs 224 cr.

Rupee appreciated 6 paise to end at 61.795/$.

Maruti reported 13.7% y-o-y rise in January sales at 1.16 lakh units. TVS Motor sold 1.88 lakh units. Bajaj Auto on the other hand reported 9% dip at 2.88 lakh units. M & M too reported 6% fall at 39930 units. TVS Motors reported 1.1% rise at 1.88 lakh units. Hero MotoCorp reported 0.4% fall at 5.59 lakh units.

India's HSBC manufacturing PMI for January slipped to a three month low of 52.9 vs 54.5 in December.

The growth of core sector, comprising of eight key infrastructure industries, slowed to a three-month low of 2.4% in December, compared with 6.7% in November.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 25 points higher opening for our market.

Key event to watch today would be RBI's policy review. Governor Rajan had surprised the market with an out of turn repo rate cut of 25 bps on January 15. Expectation is that the next rate cut would happen post the Union Budget rather than in today’s review. Focus would be on the tone and guidance of the policy which is expected to be dovish.

After Nifty nearly achieved the major 9000 target, we had said that the immediate support on the hourly chart is placed at 8850, a breach of which would generate a sell on the hourly chart and would pave the way for the further correction. The benchmark broke 8850 support on Friday and slipped further to 8751 yesterday before rebounding to end at 8797.

8900, the 61.8% retracement level of the recent 8997-8751 fall, is the immediate resistance to eye, a crossover of which is required to put bulls back in the dominating position. On the way down 8640, the 38.2% retracement level of the 8065-8997 upmove, would be immediate support to eye.

Hero Motocorp, PNB and ACC will report their quarterly earnings today.