NIFTY SET TO ACHIEVE 7840 TARGET

NIFTY SET TO ACHIEVE 7840 TARGET

WORLD MARKETS                             

While S & P 500 ended flat, Dow and Nasdaq gained 0.3% and 0.4% respectively on Friday after a better-than-expected October jobs report increased confidence in the likelihood of a December rate hike.

The October report showed the addition of 271,000 jobs, beating expectations of about 180,000, with the unemployment rate ticking lower to 5%. Average hourly earnings increased 9 cents, for an annualized increase of 2.5%.

Dollar index gained more than a percent and the euro fell below $1.08. Nymex oil fell 2% to $44.29 a barrel. Gold plunged $16 to $1088 an ounce.

European markets, except a modestly lower FTSE, gained upto 1.4%.

For the week, US indices gained 1%-1.8%, their sixth-straight week of gains. European markets, except a 0.1% lower FTSE, gained 0.4%-1.8%.

AT HOME

Benchmark indices ended marginally lower after a rangebound but choppy trading session. Sensex settled at 26265, down 39 points while Nifty lost 1 point to finish at 7954. BSE mid-cap and small-cap indices tell 0.4% and 0.6% respectively. BSE Healthcare index tumbled 2.8%, becoming top loser among the sectoral indices, followed by 1% cut in Power index. IT and Teck indices were the top gainers, up 0.8% and 0.7% respectively.

FIIs net bought stocks worth Rs 219 cr but net sold index futures and stock futures worth Rs 649 cr and 435 cr respectively. DIIs were net sellers to the tune of Rs 39 cr.

Rupee depreciated 1 paise to end at 65.755/$.

For the week, Sensex and Nifty lost 1.5% and 1.4% respectively, extending the losing streak to second straight week.

Government has decided to impose with effect from 15th November 2015, a Swachh Bharat Cess at the rate of 0.5% on all services which are presently liable to service tax.

ONGC reported better-than-expected 11% dip in net profit at Rs 4842 cr. Revenue slipped 9.4% to Rs 20679 cr. Operating profit dropped 17% q-o-q to Rs 8775 cr and margin contracted 400 bps to 42.4%. EBIDTA was lower-than-expected.

Dr Reddy nosedived after receiving a warning letter from USFDA relating to its API manufacturing facilities at Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as Oncology Formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh.

SBI reported better-than-expected 25% growth in net profit at Rs 3879 cr. NII rose 7.4% to Rs 14252 cr. Gross NPA ratio improved to 4.15% from 4.29% q-o-q and net NPA ratio improved to 2.14% from 2.24%.

PNB reported lower-than-expected 8% rise in net profit at Rs 621 cr. NII grew at better-than-estimated 4.1% to Rs 4322 cr. Gross NPA ratio improved 11 bps q-o-q to 6.36% and net NPA ratio improved 6 bps to 3.99%.

BoB's net profit plunged 89% to Rs 124 cr, impacted by higher provisions and slippages. NII fell 4.6% to Rs 3244 cr. Gross NPA ratio deteriorated 143 bps q-o-q to 5.56% and net NPA ratio rose 101 bps to 3.08%.

BHEL posted a loss of Rs 205 cr against a profit of Rs 125 cr in corresponding quarter of last fiscal. Revenue declined 3.4% to Rs 5938 cr. Bottomline figure was worse-than-expected but the topline beat estimates. At operating level, loss stood at Rs 474 cr. Margin stood at negative 8% compared to 4.7% y-o-y.

M & M reported in-line with estimated 2.4% dip in net profit at Rs 924 cr. Revenue was better-than-expected at Rs 9245 cr, down 1.8% y-o-y. Operating profit rose 1.7% to Rs 1026 cr and margin expanded by 40 bps to 11.1%. Expected figures were 3.5% and 110 bps respectively.  

Tata Motors posted a loss of Rs 430 cr as against profit of Rs 3291 cr in year-ago period, hit by charge of Rs 2493 cr on account of cars damage in Tianjin port explosion. Consolidated revenues stood at Rs 61318 cr as against Rs 60641 cr. JLR margins stood at 12.2%, down from 19.4% y-o-y.

OUTLOOK

In an unexpected development, Mahagathbandhan, led by Nitishkumar and Lalu Prasa Yadav, saw a landslide victory by securing 178 out of 243 seat Bihar assembly. BJP led NDA won just 58 seats.

Data over the weekend showed China's October exports fell 6.9% y-o-y, dropping for a fourth month, while imports tumbled 18.8%, resulting in a record high trade surplus of $61.64 bn.

Today morning Asian markets are trading mixed with modest changes but SGX Nifty is suggesting about 130 points lower opening for our market.

Readers would recall that we have been bearish on Nifty ever since immediate support of 8230 was breached on 27th October. Subsequently, we had also said that some important supports are placed in the vicinity of 8030, a breach of which can take Nifty to around 7840, where the 61.8% retracement level of the entire 7540-8336 upmove is placed. We had also said that a breach of 7840 would open up the possibility of retest of 7540 bottom.

A big gap down opening would see Nifty open around 7825, which will achieve the 7840 target and vindicate our view.

As mentioned above, a sustained trading below 7840 would open up the possibility of retest of 7540 bottom.