NIFTY NEARLY ACHIEVES 7760 TARGET; 7900 IS THE IMMEDIATE HURDLE

NIFTY NEARLY ACHIEVES 7760 TARGET; 7900 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices soared 2.1% on Friday on the back of a strong jobs report and ECB President Mario Draghi maintaining a dovish stance in a speech.

Nonfarm payrolls data showed the U.S. economy created 211,000 jobs and increase in wages for November, beating market expectations. The number of jobs created in October and September were also revised higher. The unemployment rate stood unchanged at 5%. This should help bolster the case for the U.S. Federal Reserve to raise rates at its December meeting.

The U.S. trade deficit widened unexpectedly by 3.4% to $43.9 billion in October as exports fell to a three-year low, suggesting that strong dollar pressure on trade could again weigh on economic growth in the fourth quarter.

European Central Bank President Mario Draghi said quantitative easing was unlimited."There is no particular limit to how we can deploy any of our tools," he said.

European markets, except a 0.1% rise in FTSE, lost upto 0.6%.

Nymex oil settled 2.7% lower at $39.97 a barrel after OPEC left its production levels unchanged for the third year in a row despite a global supply glut. Gold climbed $23 to $1084 an ounce.

For the week, Dow and Nasdaq gained 0.3% each and S & P 500 rose 0.1%. European markets however fell 2.2%-4.8% with DAX leading the tally. Nymex oil fell 4.2% for the week.

AT HOME

After a gap down opening, benchmark indices saw a rangebound but choppy trade through rest of the session and finally ended lower by a percent, extending the losing streak to third straight day and closing at the lowest level since 18th November. Sensex settled at 25638, down 249 points while Nifty lost 82 points to finish at 7782. BSE mid-cap and small-cap inidces lost 1.1% and 0.6% respectively. Except a 0.4% and 0.1% higher Healthcare and Metal indices respectively, all the BSE sectoral indices ended in red with Utilities and Power indices leading the tally, down 2% and 1.8% respectively.

Sun Pharma surged 4% after the company announced that it has received approval from the US FDA for generic version of Gleevec, a drug that treats a rare form of blood cancer.

For the week, Sensex and Nifty lost 1.9% and 2% respectively, breaking the two-week winning streak.

FIIs net sold stocks, index futures and stock futures worth Rs 1745 cr, 966 cr and 325 cr respectively. DIIs were net buyers to the tune of Rs 1069 cr.

Rupee depreciated 4 paise to end at 66.695/$.

The committee, led by Chief Economic Advisor Arvind Subramanian submitted its report on GST to Finance Minister.  The committee decided to provide a range for the GST rate for various products and services: from 12% to 40% (the higher rate being applicable for select products such as luxury cars or tobacco products, etc). However, the key revenue neutral rate suggested by the CEA panel stood at 15-15.5%. The standard rate for GST stood at 17-18%, the rate at which most products would likely be taxed. The panel excluded real estate, electricity and alcohol and petroleum products while calculating the tax rate, as some states have expressed reservations over giving up tax control on the lucrative items but the CEA panel suggested these be brought under the GST ambit soon.

OUTLOOK

Today morning Nikkei is up a percent and half, other Asian markets are trading with modest gains and SGX Nifty is suggesting about 40 points higher opening for our market.

Readers would recall that last week, we had advised going short below the immediate support of 7890 for the target of 7760, where the trendline adjoining recent bottoms on the hourly chart was placed. The benchmark, after breaking 7890 support on Thursday, plunged to 7775 on Friday before closing at 7782, vindicating our view.

While the benchmark is set for a gap up opening, the bias would continue to be negative until immediate hurdle on the hourly chart, placed around 7900 is taken out.

7775, the bottom made on Friday, would now be the immediate support below which 7714-7690 region, where multiple supports on the daily chart are placed, would be the import support area to eye.