NIFTY REBOUNDS AFTER NEARLY ACHIEVING 7540 TARGET

NIFTY REBOUNDS AFTER NEARLY ACHIEVING 7540 TARGET

WORLD MARKETS                             

US indices gained 0.4%-0.6% yesterday as oil stabilised.

Nymex oil rose 69 cents or 1.94% to $36.31 a barrel, pausing a six-day losing streak that took crude to its lowest in nearly seven years. Natural gas pared losses to hold about 4.8% lower after hitting a low of $1.86, its lowest in nearly 14 years.

European markets tumbled 1.3%-2.4%. Speaking in Bologna, Italy, ECB President Draghi reiterated his call that the bank stood ready to act and once again added that governments of the 18 countries that use the euro should also be playing their part.

Earlier Shanghai Composite gained about 2.5% after some encouraging reports on Chinese industrial production, retail sales and fixed asset investment.

Gold fell $12.30 at $1063.40 an ounce.

AT HOME

After falling nearly three fourth of a percent in the initial trade, benchmark indices spiked up a percent and quarter from the bottom of the day to end higher by about half a percent. Sensex settled at 25150, up 106 points while Nifty rose 40 points to finish at 7650. BSE mid-cap and small-cap indices gained 0.7% and 0.4% respectively. BSE Metal and Basic Material indices climbed 2.4% and 1.6% respectively, becoming top gainers among the sectoral indices while Realty and Capital Goods indices lost 0.2% each.

FIIs net sold stocks worth Rs 157 cr but net bought index futures and stock futures worth Rs 165 cr and 124 cr respectively. DIIs were net buyers to the tune of Rs 386 cr.

FIIs net sold stocks worth Rs 157 cr but net bought index futures and stock futures worth Rs 165 cr and 124 cr respectively. DIIs were net buyers to the tune of Rs 386 cr.

Rupee tumbled 21 paise to end at 67.09/$.

Consumer Price Inflation spiked to a 14-month high of 5.41% in November from 5% in October, led by sharp rise in food price inflation.

OUTLOOK

Today morning Asian markets are trading mixed and SGX Nifty is suggesting a flattish start for our market.

Just to reiterate, we had initiated "short" recommendation on Nifty when 7880 was breached on 3rd December. While 7700 was our initial target we were quite sure that retest of 7540, the bottom made in September, is on the cards.

The benchmark touched a low of 7551 yesterday, nearly achieving the 7540 target mentioned above and vindicating our negative stance. The benchmark rebounded smartly to end at 7650.

7700, the erstwhile support, would now act as the immediate hurdle, a crossover of which is required to generate a buy on the hourly chart, upon happening of which further upside till about 7815, which is the 61.8% retracement level of the recent 7979-7551 fall can materialise.

On the way down, 7540 continues to be important support, upon breach of which 7300, in the vicinity of which 34-month average as well as the lower band of monthly bollinger are placed, would be the major support to eye.