WORLD EQUITIES GET A CHINA BOOST

WORLD EQUITIES GET A CHINA BOOST

WORLD MARKETS                             

US indices soared 2.4%-2.7% yesterday, taking its cues from a late-day surge in Chinese equities.

Earlier the Hang Seng ended up 3.28% and the Shanghai Composite closed almost 3% higher, brushing aside the soft data on reports that railway projects worth almost $11 billion have been approved. Data released yesterday showed China's dollar-denominated exports declined by 5.5% year-over-year in August, while imports tumbled 13.8%.

Japan's blue-chip Nikkei stock index however closed down 2.4% and move into negative territory for the year so far as the weak trade numbers fueled concerns about demand for Japanese exports from China.

Back in the US, the National Federation of Independent Business said its Small Business Optimism Index rose modestly in August, up half a point to 95.9. The gain suggests the economy continued to grow at a steady clip halfway through the third quarter. July consumer credit increased by $19.10 billion, while June's figure was revised up $27.1 billion from $20.7 billion.

European markets gained 0.6%-1.6% with DAX leading the tally after data showed that both exports and imports in Germany hit a record high in July. Official statistics from the European Commission showed that the euro zone economy grew faster than expected in the second quarter, expanding by 1.5% year-on-year, versus the previous estimate of 1.2%.

Nymex oil settled down 11 cents at $45.94 a barrel.

AT HOME

After a lackluster morning trade, benchmark indices saw a big surge in the noon trade to end higher by 1.7%. Sensex settled at 25318, up 424 points while Nifty rose 129 points to finish at 7688. BSE mid-cap and small-cap indices gained 1% and 0.6% respectively. Except a 1.2% and 0.8% cut in BSE Consumer Durable and FMCG indices respectively, all the sectoral indices ended in green with Bankex leading the tally, up 3.6%, followed by 3.2% each rise in Power and Capital Goods indices.

FIIs net sold stocks and stock futures worth Rs 660 cr and 279 cr respectively but net bought index futures worth Rs 802 cr. DIIs were net buyers to the tune of Rs 447 cr.

Rupee bounced back 27 paise to end at 66.55/$.

In a high level meeting with ministers and industry leaders Prime Minister Narendra Modi yesterday asked India Inc to increase risk-taking appetite and step up investments even as industry leaders pressed for interest rate cut and more policy action to improve ease of doing business.

OUTLOOK

Today morning Asian markets are trading with gains of 1%-5% with Nikkei leading the tally and SGX Nifty is suggesting about 90 points higher opening for our market.

In yesterday's report we had mentioned that the immediate hurdle on the hourly chart has now moved lower to 7735, which should serve as the revised stop loss for short positions.

A gap up opening today would take the benchmark above this level. 

If one takes the recent 8092-7540 fall, the 50% and 61.8% retracement levels of this fall, placed at 7815 and 7880 respectively, would be the upside level to eye.

Traders would do well to exit short positions once the high made in first hour is crossed.

Overall trend however continues to be bearish and this upmove should be considered just a pullback from the oversold territory and not a trend reversal.