NIFTY BREAKS 7840 SUPPORT; STAY SHORT WITH THE STOP LOSS OF 7940

NIFTY BREAKS 7840 SUPPORT; STAY SHORT WITH THE STOP LOSS OF 7940

WORLD MARKETS                             

US indices plunged 1.2% -1.4% yesterday on the back of sharp decline in oil prices and several speeches from Fed officials that hinted at an interest-rate hike next month.

Nymex oil fell $1.2 or 2.8% to $41.75 a barrel, after the U.S. government reported a stockpile build four times above market expectations.

Weekly jobless claims came in at 276,000, unchanged week-over-week, but higher than the expected 270,000

European markets tumbled 1.1%-2.4%. ECB President Draghi warned that signs of a sustained turnaround in core inflation had weakened and reiterated that the bank was looking at a "range of instruments available in case more accommodation should be seen as necessary. The euro fell to aound $1.07 after his remarks.

Gold settled down $4 to $1081 an ounce.

AT HOME

Benchmark indices gained about half a percent on the Muhurat trading session on Wednesday. Sensex settled at 25867, up 124 points while Nifty rose 42 points to finish at 7825.

On Tuesday, after opening lower by about half a percent, benchmark indices saw a sustained downward move through the session to end with deep cuts of a percent and half. Sensex settled at 25743, down 378 points while Nifty lost 132 points to finish at 7783.

FIIs net sold stocks, index futures and stock futures worth Rs 661 cr, 1081 cr and 258 cr respectively. DIIs were net buyers to the tune of Rs 658 cr.

Rupee appreciated 13 paise to end at 66.31/$.

Government on Tuesday announced FDI and liberalisation in 15 sectors, including agriculture, mining plantation, defence, broadcasting, aviation, construction, manufacturing, private banking sector, cash and carry wholesale trading, among others.

India's industrial output grew at a slower-than-expected pace of 3.6% in September as against upwardly revised 6.3% growth registered in August. Also, the retail inflation climbed to a four-month high of 5% in October as against 4.41% in September as food prices escalated on supply deficiency in pulses.

OUTLOOK

Today morning Asian markets are trading with cuts of upto 2% with Hang Seng leading the tally and SGX Nifty is suggesting about 60 points lower opening for our market.

Just to reiterate, we have been bearish on Nifty ever since immediate support of 8230 was breached on 26th October. We were working with an initial downside target of 8030, a breach of which, we had said, will be a sell signal on the daily chart and can take Nifty to 7840. Off late, we had said that a breach of 7840, which is the 61.8% retracement level of the entire 7540-8336 upmove, would open up the possibility of the retest of the 7540 bottom.

The benchmark, on Tuesday, plunged to 7783, breaching 7840 level decisively.

We are now working with the downside target of 7540 as mentioned above.

Immediate resistance on the hourly chart has moved lower to 7940, with the stop loss of which short positions should be held on to.

Coal India will report its quarterly earnings today.