NIFTY ACHIEVES DOWNSIDE TARGET OF 8100; TRAIL STOP LOSS TO 8220

NIFTY ACHIEVES DOWNSIDE TARGET OF 8100; TRAIL STOP LOSS TO 8220

WORLD MARKETS                             

Dow and S & P 500 lost 0.1% each while Nasdaq, pressured by biotech and semiconductor stocks, fell 0.4% yesterday.

Healthcare index gained 0.4%, helped by gains of more than 5.5% in Allergan after the firm confirmed that it has been approached by Pfizer and is in talks regarding a potential deal.

In economic news, third-quarter GDP showed an annual rate of 1.5%, slightly missing expectations and below the second-quarter's 3.9 percent. Weekly jobless claims edged higher to 260,000. Pending home sales in September fell 2.3% to its second-lowest reading of 2015.

Dollar index fell about half a percent. Nymex oil rose 12 cents to $46.06 a barrel, slightly extending Wednesday's 6.3% rally. Gold plunged 2.4% to settle at $1147 an ounce.

European markets fell upto 1.1% with Italy and FTSE leading the tally.

AT HOME

Benchmark indices tumbled three fourth of a percent, extending the losing streak to fourth straight day and closing at two-week low. Sensex settled at 26838, down 202 points while Nifty lost 59 points to finish at 8112. BSE mid-cap and small-cap indices lost 0.4% each. Except a 0.4% and 0.04% rise in BSE Consumer Durable and Auto indices respectively, all the sectoral indices ended in red with Bankex, Capital Goods and Power indices leading the tally with cuts of 1.1% each.

FIIs net bought stocks worth Rs 174 cr but net sold index futures and stock futures worth Rs 48 cr and 998 cr respectively. DIIs were net sellers to the tune of Rs 299 cr.

Rupee tumbled 37 points to finish at 65.29/$.

Yes Bank reported better-than-expected 26.4% rise in quarterly net profit at Rs 610 cr, driven by strong net interest income, other income and operating profit.  However, higher provisions and tax cost limited profitability. NII jumped 29.5% to Rs 1108 cr. Gross NPA ratio worsened 15 bps q-o-q to 0.61% while net NPA ratio deteriorated 7 bps to 0.20%.

NTPC reported 40% y-o-y growth in quarterly net profit at Rs 2898 cr, boosted by tax gain and operational performance despite lower other income. Revenue rose 7% to Rs 17898 cr. Operating profit jumped 24.3% to Rs 4030 cr and margin expanded by 310 bps to 22.5%.

Dr Reddy reported better-than-estimated 26% y-o-y growth in net profit at Rs 722 cr, driven by strong operational performance and robust growth in US, Europe and India businesses. Revenue rose 11.2% to Rs 3989 cr. Operating profit shot up 43.2% and margins expanded 430 bps to 28.6%.

OUTLOOK

Today morning Asian markets are trading with cuts of upto 0.7% and SGX Nifty is suggesting about 30 points lower opening for our market.

In our Wednesday's report titled "GO SHORT BELOW 8217 FOR TARGET OF 8100", we had clearly mentioned that a breach of 8217 would confirm a sell on the hourly chart and would open up the space for the further downside till about 8100, where the immediate previous bottom on the daily chart is placed.

The benchmark touched a low of 8098 yesterday before closing at 8112, achieving the target mentioned above and vindicating our view.

8089 to be precise, is the immediate previous bottom on the daily chart and 8040 is where the 34-DMA is placed. This makes 8090-8040 an important support area. Traders can book some profit in short positions as 8040 approaches.

Immediate hurdle on the hourly chart has moved to 8220, which should serve as the revised stop loss for short positions.

ICICI Bank, ITC, LT and Kotak Mahindra Bank will report their quarterly earnings today.