STAY LONG WITH THE STOP LOSS OF 7910

STAY LONG WITH THE STOP LOSS OF 7910

WORLD MARKETS                             

While Dow ended marginally lower, S & P 500 and Nasdaq gained 0.1% and 0.3% respectively on Friday helped by a sharp rebound in crude oil and good economic data.

Personal income rose 0.4% and consumer spending rose 0.3%. June consumption was revised slightly higher to 0.3% from 0.2%. The final read on August consumer confidence from the University of Michigan came in at 91.9, slightly lower than the initial print and July's figure.

Nymex oil surged $2.66 or 6.25% to $45.22 a barrel. Dollar index spiked with the euro below $1.12.  Gold climbed $11.40 to $1134 an ounce.

European markets ended mixed with DAX and Italy ending lower and FTSE, CAC and Spain ending higher.

Earlier, Shanghai Composite ended 4.8% higher. However, for the week, it lost 7.8%.

For the week, Dow, S & P 500 and Nasdaq gained 1.1%, 0.9% and 2.6% respectively. S & P 500 recovered from a 5.27% for its biggest intra-week reversal since the week of Sept. 19, 2008, when Lehman Brothers went bankrupt. European markets gained 1%-1.7%.

AT HOME

After climbing just under 2% in the morning trade, benchmark indices gave away nearly two third of the gains in the noon trade to end higher by six tenth of a percent on the last day of the volatile week. Sensex settled at 26392, up 161 points while Nifty gained 53 points to finish at 8002. BSE mid-cap and small-cap indices gained 0.2% and 0.1% respectively. BSE Teck and IT indices were the top gainers among the sectoral indices, rising 1.8% and 1.5% respectively while Realty and Consumer Durable indices were the top losers, down 0.5% and 0.4% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 56 cr, 2512 cr and 432 cr respectively.  DIIs were net buyers to the tune of Rs 847 cr.

Rupee depreciated 10 paise to end at 66.14/$.

For the week, Sensex and Nifty lost 3.6% each.

OUTLOOK

A report by The Financial Times over the weekend said that Beijing will abandon large-scale share purchases, sparking concerns over more declines for A-shares.

Fed Vice Chairman Stanley Fischer, at the Jackson Hole symposium over the weekend, said that it was too early to tell whether the case for a September interest rate hike is compelling, creating further uncertainty over when the U.S. central bank will finally tighten monetary policy.

Today morning Shanghai Composite is down nearly 3%, other Asian markets are trading with cuts of upto a percent and SGX Nifty is suggesting about 30 points lower opening for our market.

In Friday's report we had mentioned that 8060, the lower level of the big gap down opening witnessed on Monday, is the immediate hurdle to eye, a crossover of which would pave the way for the further upside till about 8225, which is the upper level of this gap.

Nifty, while crossed this hurdle in the morning trade and touched a high of 8092, slipped in the noon trade to end at 8002.

The benchmark however continues to be in a buy mode on the hourly chart. Immediate support on the hourly chart is placed around 7910, with the stop loss of which trading longs can be held on to.

India's April-June quarter GDP data would be released today and is expected to show a growth of 7.5%, up from 6.7% y-o-y. Gross Value Added (GVA) however is expected to fall to 6.8% from 7.4% y-o-y.

OIL STAGES A MAMMOTH REBOUND; NIFTY HOLDS CRUCIAL 7800 SUPPORT

OIL STAGES A MAMMOTH REBOUND; NIFTY HOLDS CRUCIAL 7800 SUPPORT

WORLD MARKETS

US indices soared 2.3%-2.5% yesterday in a second straight day of recovery from a recent plunge, with sentiment helped by a rebound in oil and continued signs of strength in the U.S. economy.

Key highlight of the day was a big surge in oil. Nymex crude soared more than 10.3% to $42.56 a barrel, its biggest daily gain since March 2009, with most of the gains attributed to short covering after lower-than-expected crude inventories. Brent also surged more than 8% to above $46 a barrel.

Back in the US, the second estimate of second-quarter GDP came in at 3.7%, topping the first read of an annualized 2.3%. Weekly jobless claims came in slightly lower than expected at 271,000, marking the first decline in five weeks. July pending home sales rose 0.5%, holding steady from an upwardly revised June reading of a 0.5% increase.

Earlier Shanghai Composite soared 5.4% to reclaim the 3000 mark.

Dollar strengthened against the euro and yen but weakened against emerging market currencies.

European markets climbed 3.1%- 3.6%.

                                                             

AT HOME

After a big gap up opening, benchmark indices added some more weight through the session to end with hefty gains of 2% on the expiry of the August derivative series, registering the biggest single day gain since 15th January. Sensex soared 517 points to settle at 26231 while Nifty finished 7949, up 157 points. BSE mid-cap and small-cap indices climbed 2.5% each. All the BSE sectoral indices ended in green with Consumer Durable and Realty indices leading the tally, up 5.1% and 4% respectively.

FIIs net sold stocks worth Rs 3347 cr but net bought index futures and stock futures worth Rs 1385 cr and 10 cr respectively. DIIs were net buyers to the tune of Rs 2577 cr.

Rupee appreciated 10 paise to end at 66.04/$.

The parliamentary affairs minister Venkaiah Naidu today announced nominations of 98 cities for its ambitious Smart Cities project. Remaining two cities will be announced later. As per the five-year plan, the government will allocate Rs 200 crore this year and follow up with Rs 100 crore every year for remaining four years for every city. The cities will be developed to provide world class infrastructure, sustainable environment and smart solutions

OUTLOOK

Today morning, Asian markets are trading with gains of 2%-2.6% and SGX Nifty is showing a reading of 8130, which is higher by about 130 points compared to closing level of September future in our market.

After today's gap up opening, Nifty will be close to 8060 resistance we had mentioned in yesterday's report. 8060 is the lower level of the big gap down opening seen on Monday.

Above 8060, 8225, the upper level of the gap mentioned above, would be the next target to eye.

Traders can initiate trading longs once the high made in first hour is taken out for the target of around 8200-8225. 7930 is the immediate support on the hourly chart, where stop losses should be placed in that case.

LARGEST GAIN SINCE 2011 FOR US MARKET; 7800 CONTINUES TO BE CRUCIAL SUPPORT FOR NIFTY

LARGEST GAIN SINCE 2011 FOR US MARKET; 7800 CONTINUES TO BE CRUCIAL SUPPORT FOR NIFTY

WORLD MARKETS                             

US indices soared 4%-4.2% yesterday, rebounding from six consecutive days of decline and registering the best single day gain since 2011.

Apart from an oversold state, other catalysts for the rebound were comments from the Fed's William Dudley that a September rate hike looks "less compelling" and a strong durable-goods report.

Orders for durable goods in July rose 2.2%, above the expected 0.1% rise, but down from the 3.4% gain in June.

Earlier, China's central bank said it had injected 140 billion yuan ($21.8 billion) into the interbank money market via short-term liquidity operations (SLOs). On Tuesday, PBoC had lowered interest rates and the reserve requirement ratio (RRR) by 25 basis points and 50 basis points respectively.

European markets plunged 0.8%-1.7%.

Nymex oil fell 71 cents or 1.8% to $38.60 a barrel. Gold fell $13.70 to $1125 an ounce.

AT HOME

After plunging a percent and third in the opening trade, benchmark indices soared nearly 2% from the bottom of the day, only to give away all the gains later to end lower by more than a percent. Sensex settled at 25715, down 318 points while Nifty lost 89 points to finish at 7792. BSE mid-cap index lost 0.8% while the small-cap index gained 0.2%. Except a 1.6% and 0.2% rise in BSE Power and Metal indices respectively, all the sectoral indices ended in red with Bankex and Healthcare indices leading the tally, down 1.7% and 1.1% respectively.

FIIs net sold stocks and index futures worth Rs 2346 cr and 89 cr respectively but net bought stock futures worth Rs 243 cr. DIIs were net buyers to the tune of Rs 1881 cr.

Rupee depreciated 4 paise to end at 66.14/$.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of 2% and SGX Nifty is suggesting about 70 points higher opening for our market.

As mentioned in Tuesday's report Nity is at a very very crucial juncture. 7800 is where 20-month moving average is placed and our study shows that in even steepest of the correction in the 2003-2008 bullrun, the benchmark never closed below 20-month moving average.

This makes 7800 a very crucial support, a monthly close below which would be considered a major trend reversal.  

The benchmark closed at 7792 yesterday but is set to stage a rebound today. On the way up, 8060, the lower level of the big gap down opening seen on Monday, would be the immediate hurdle to eye.

One should wait for the monthly close for taking a fresh directional view on Nifty.

NIFTY AT A VERY CRUCIAL JUNCTURE

NIFTY AT A VERY CRUCIAL JUNCTURE

WORLD MARKETS

After plunging 5%-8% in the opening trade, US indices managed to cut some losses through the volatile session but still ended lower by 3.6%-4% on concerns over global growth and the health of the Chinese economy.

Commodities too participated in the meltdown. Nymex oill fell $2.21 or 5.5% to settle at $38.24 a barrel, the lowest since February 2009. LME Copper fell nearly 4% to $4855 a tonne, marking a six-year low.

The CBOE Volatility Index (VIX), considered the best gauge of fear in the market, traded near 40. Earlier in the session the index leaped above 50 for the first time since February 2009.

Dollar index fell more than 1.5%, with the euro near $1.16 and the yen stronger at 119 yen versus the greenback. Gold fell $6 to $1154 an ounce.

Earlier, Shanghai Composite collapsed 8.5%, its greatest one-day drop since 2007.

European markets nosedived 4.7%-6%

                                                             

AT HOME

It was a bloodbath on Dalal Street as benchmark indices collapsed six percent, registering the largest percentage fall since January 2008 for Nifty and since March 2008 for Sensex. Sensex nosedived 1625 points to settle at 25741 while Nifty ended at 7809, down 491 points.  BSE mid-cap and small-cap indices tumbled 7.7% and 8.8% respectively. All the BSE sectoral indices ended in red with Realty and Oil & Gas indices leading the tally, down 11% and 9.2% respectively.

FIIs net sold stocks worth Rs 5275 cr, marking the highest single day sell figure ever.

Rupee tumbled 81 paise to end at 66.46/$, hitting a fresh 2-year low.

OUTLOOK

Today morning, at the time of writing this report (7.40 am), Shanghai is down nearly 5% but other Asian markets are trading with gains of upto a percent and half and SGX Nifty is suggesting about 150 points higher opening for our market. US stock futures are up about 2%.

In yesterday's report we had mentioned that a breach of 8210, the 61.8% retracement level of the entire 7940-9119 upmove, would open up the possibility of the retest of the 7940 bottom and had advised holding on to trading shorts with the stop loss of 8322.

The benchmark collapsed 491 points to finish at 7809, closing even below the 7940 bottom.

After yesterday's fall, Nity is at a very very crucial juncture. 7800 is where 20-month moving average is placed and our study shows that in even steepest of the correction in the 2003-2008 bull run, the benchmark never closed below 20-month moving average.

This makes 7800 a very crucial support, a monthly close below which would be considered a major trend reversal.  

8060, yesterday's high, would be the immediate hurdle to eye.

After yesterday's heady fall, markets are expected to be very choppy today and one should ideally allow Nifty to settle down before initiating fresh trade.