NIFTY REBOUND AFTER HOLDING ON TO CRUCIAL 800-7960 SUPPORT

NIFTY REBOUND AFTER HOLDING ON TO CRUCIAL 800-7960 SUPPORT

WORLD MARKETS                             

US indices soared around a percent and a quarter yesterday amid signs of encouraging developments in the Greece debt talks and better economic growth as yields continued to rally.

Media reports suggested that the ECB had raised the cap on emergency liquidity that Greek banks could draw from Greece's central bank. Reports also suggested that Germany could be willing to offer Greece a staggered deal on aid.

In the US, total weekly mortgage applications shoed an 8.4% jump as buyers rushed to get mortgages ahead of rising rates.

The US 10-year Treasury yield settled at 2.48% after hitting an 8-month high of 2.495%. German 10-year bund yield rallied above 1% for the first time since September 2014 as market found signs of improvement in European economic data. Euro hit a three-week high above $1.13 while the dollar fell to a two-week low against the yen after Bank of

Japan Governor said the real effective exchange rate showed the Japanese currency is "very weak".

European markets climbed 1.1%-2.5%, ending a six-day downtrend.

Nymex oil gained $1.29 or 2.1% to $61.43 a barrel as the weekly inventory report indicated US production is leveling off. Gold rose $9 to $1187 an ounce.

AT HOME

Benchmark indices soared a percent and third in yesterday's trade with Nifty breaking seven day losing streak. Sensex settled at 26840, up 359 points while Nifty climbed 102 points to finish at 8124. BSE mid-cap and small-cap indices gained 1.1% each. All the BSE sectoral indices ended in green with IT and Capital Goods indices leading the tally, up 2% each.

FIIs net sold stocks worth Rs 482 cr but net bought index futures and stock futures worth Rs 32 cr each.

Rupee appreciated 9 paise to end at 63.83/$.

India's current account deficit for fourth quarter ended March 2015 stood at $1.3 bn (0.2% of GDP) from $1.2 bn (0.2% of GDP) for January-March 2014. CAD for Q4 narrowed sharply from deficit of $8.3 bn (1.6% of GDP) in the third quarter ended December 2014.

Government yesterday announced Rs 6,000 crore interest free loan to sugar industry. Banks will pay Rs 6,000 crore interest free loan for one year to sugar industry for payment to farmers and interest on Rs 6,000 crore loan will be paid by government. After one year, banks and mills will work out interest repayment.

Government also approved the continuation of production of urea from Madras Fertilizers, Manali, Mangalore Chemical and Fertilizers Limited, Mangalore, and Southern Petrochemicals Industries Corporation (SPIC), Tuticorin using Naphtha as feedstock till availability of gas through gas pipeline or by any other means.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.2%-1.5% with Nikkei leading the tally and SGX Nifty is suggesting about 20 points higher opening for our market.

As we have been mentioning for quite some time, 8000-7960 is the crucial support area for Nifty, a breach of which would mark a breakdown on the weekly chart and can take Nifty to around 7650.

Nifty, after touching a low of 8005 on Tuesday, rebounded sharply in yesterday's trade to end at 8124, reinforcing the support hypothesis. 

We had also advised trailing stop loss to 8100 in trading shorts yesterday as that was the immediate hurdle on the hourly chart.

A crossover of 8152, the top made yesterday, would confirm a buy on the hourly chart and can take Nifty to around 8250 where the 34 DMA is placed. Immediate support on the hourly char is placed around 8080, with the stop loss of which long positions can be initiated once 8152 is crossed.