RECOVERY FADES

RECOVERY FADES

WORLD MARKETS                             

After opening with gains of nearly a percent, US indices saw a relentless fall through the session and finally ended lower by 1.1%-1.4%, failing to extend a rally in global markets on the back of selling pressure in Apple and energy-related counters.

The higher opening was attributed to big gains in Asia where Nikkei jumped 7.7% for its biggest one-day gain since 2008 and China's Shanghai Composite index closed up 2.3%. China's Ministry of Finance said the government will strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system, adding to other steps to re-energize sputtering growth. Japanese stocks also rallied on back of comments by Prime Minister Shinzo Abe that the government aims to lower the corporate tax rate.

Apple closed nearly 2% lower, after initially spiking more than 1.5% amid its afternoon event, at which the company unveiled new products.

Energy stocks led the losers after Nymex oil tumbled $1.79 or 3.9% to $44.15 a barrel. Brent also fell more than 3% to trade below $48 a barrel. Gold fell $19 to $1102 an ounce.

Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings in July was a record 5.8 million, according to the U.S. Bureau of Labor Statistics. The hiring rate declined to 3.5%. Weekly mortgage applications fell 6.2% as refinancings slid.

European markets gained 0.3%-1.7%.

AT HOME

Benchmark indices extended Tuesday's pullback by climbing more than a percent and half in today's trade on the back of positive global cues. Sensex soared 402 points to settle at 25720 while Nifty finished at 7819, up 130 points. BSE mid-cap and small-cap indices gained 1.9% and 1.8% respectively.

All the BSE sectoral indices ended in green with Metal and Auto indices leading the tally, up 3.5% and 2.9% respectively.

FIIs net sold stocks worth Rs 452 cr but net bought index futures and stock futures worth Rs 389 cr and 1016 cr respectively. DIIs were net buyers to the tune of Rs 1195 cr.

Rupee appreciated 14 paise to end at 66.40/$.

Finance Minister Arun Jaitley yesterday said that the government has given up plans to reconvene a parliament session to secure approval for a common goods and services tax (GST) because of lack of political support.

The Union cabinet on yesterday approved rules that will allow telecom operators to buy and sell unused spectrum among themselves, a move that may spur consolidation in India’s fragmented telecom industry and also help improve service quality by reducing the number of dropped calls.

Government also cleared Gold Monetisation Schme, under which, gold in any form can be deposited with banks for a period of one to 15 years that will earn interest while redemption will be at the prevailing value at the end of the tenure. Also approved was a Sovereign gold bond, aimed at providing an alternative to physical gold. Such bonds will be issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of five years to seven years with a rate of interest to be calculated on the value of the metal at the time of investment.

The Union Cabinet also approved National Offshore Wind Energy Policy which will pave the way for development of this renewable source of energy, including setting up of projects and research in the area.

The Union Cabinet also approved the proposal to allow 100% foreign direct investment (FDI) in white labelled automated teller machines (ATM) through the automatic route. The decision is likely to result in faster growth of the white labelled ATMs--set up by private non-banking entities—as flow of foreign funds will now get expedited.

OUTLOOK

In Japan, core machinery orders fell 3.6% in July from a month earlier, missing expectations for a rise of 3.7%. China's consumer price index (CPI) rose 2% in August from a year earlier, beating expectations for a 1.8% gain and up from 1.6% in July. 

Asian markets are trading with cuts of 1%-3.5% with Nikkei leading the tally. SGX Nifty is suggesting about 80 points lower opening for our market.

In yesterday's report we had mentioned that while traders can exit short positions once the high made in first hour is crossed, the overall trend continues to be bearish and any upmove should be considered just a pullback from the oversold territory and not a trend reversal.

The benchmark, after touching a high of 7846, closed at 7819 and is set to open with a big gap down today.

Immediate support on the hourly chart is placed at 7700 a sustained trading below which would open up the possibility of retest of the 7540 bottom made on Monday.

7845, the double top on hourly chart, is the immediate hurdle above which 7965, the 38.2% retracement level of the entire 8655-7540 fall, would be the next target to eye.