DOW, S & P 500 AT RECORD HIGH; RECORD CLOSING FOR NIFTY

DOW, S & P 500 AT RECORD HIGH; RECORD CLOSING FOR NIFTY

WORLD MARKETS

US indices gained between 0.6%-0.9% yesterday with Nasdaq closing above 5000 for the first time since March 2000 and Dow and S & P at records as investors cheered U.S. economic data and an interest rate cut in China.

Markit's final Manufacturing PMI rose to 55.1 in February from 53.9 in January, the highest level since October. ISM Manufacturing for February was 52.9, its slowest pace in 13 months. Construction spending fell 1.1 percent in January. Personal income increased 0.3%, while personal spending fell 0.2% in January.

The People's Bank of China (PBOC) cut benchmark interest rates by 25 bps to 5.35% on Saturday—the second cut in three months. The HSBC/Markit manufacturing PMI for China climbed to 50.7 in February—the strongest level since July—from the contraction level of 49.7 in January,

Nymex crude settled down 17 cents at $49.59 a barrel. Brent posted its biggest drop in a month, down 5% to settle at $59.54 on speculation that a nuclear deal could lift Iran's sanctions and boost its export.

European markets ended flat to modestly lower. The flash inflation rate for the euro zone came in at -0.3% on an annual basis. This continued to show deflation for the month of February but was better than market expectations of a fall to -0.4%. Meanwhile a manufacturing PMI for the euro zone came in at 51.0 in February, unchanged from January, according to Markit. The unemployment rate fell to 11.2 percent in January for the euro zone.

                                                             

AT HOME

Sensex and Nifty gained 0.3% and 0.6% respectively yesterday, extending the winning streak to third straight day with Nifty achieving record high on closing basis. Sensex gained 98 points to settle at 29459 while Nifty finished at 8957, up 55 points. BSE mid-cap and small-cap indices soared 1.3% and 0.9% respectively. BSE Capital Goods index soared 3.6%, becoming top gainer among the sectoral indices, followed by 1.9% rise in Healthcare index. FMCG index tumbled 1.9%, becoming top loser, followed by 1.2% cut in Consumer Durable index.

FIIs net bought stocks and index futures worth Rs 425 cr and 851 cr respectively but net sold stock futures worth Rs 295 cr. DIIs were net buyers to the tune of Rs 180 cr.

Rupee depreciated 4 paise to end at 61.865/$.

Ashok Leyland reported 36% jump in February sales at 10762 units. TVS Motor reported 15% jump at 2.04 lakh units. That of Hero Motocorp fell 3.9% to 4.84 lakh units. M & M reported 9.8% dip at 38033 units. Bajaj Auto reported 22% dip at 2.43 lakh units.

India's HSBC manufacturing PMI fell for the second consecutive month to 51.2 in February from 52.9 in January. This is the lowest reading in five months.

Another data showed growth in eight core industries slowed to 1.8% in January, the lowest in 13 months. The growth was 2.4% in December 2014.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had mentioned that Nifty had broken out of a trendline resistance on Saturday. We had also said that while 8997, the record high made on 30th January would be the immediate target to eye, there is possibility of Nifty climbing all the way to about 9200 in 1-2 weeks where the upward sloping trendline adjoining major tops on the weekly chart is placed.

The benchmark yesterday touched a high of 8972 before closing at 8957 which is the highest ever close.

"Stay long with a trailing stop loss" continues to be the advice. Immediate support on the hourly chart is placed at 8800, which should serve as that stop loss.