NIFTY SET TO ACHIEVE 7700 TARGET

NIFTY SET TO ACHIEVE 7700 TARGET

WORLD MARKETS                             

US indices fell about seven tenth of a percent, weighed by a sharp decline in energy stocks as oil plunged to a near-seven-year low.

Nymex oil fell $2.32 or 5.80% to $37.65 a barrel, the lowest since February 2009. Brent settled down 5.3% to $40.73. The decline came after the Organization of the Petroleum Exporting Countries failed on Friday to agree on a production curb to stem sliding prices and a stronger dollar made holding crude positions more expensive. Instead OPEC oil ministers dropped any reference to the group's output ceiling for the first time in decades. This highlighted disagreements among members on how to accommodate Iranian oil supply in the market once Western sanctions are lifted.

European markets ended mixed. FTSE lost 0.2% while DAX and CAC gained 1.2% and 0.9% respectively.

AT HOME

After a gap up opening, Sensex and Nifty tumbled 1% and 0.8% from the top the day to end lower by 0.4% and 0.2% respectively. Sensex settled at 25530, down 108 points while Nifty lost 16 points to finish at 7765. BSE mid-cap index lost 0.1% while the small-cap index gained 0.2%. BSE FMCG index plunged 2.4%, becoming top loser among the sectoral indices, followed by 1% cut in Energy index. Healthcare and Realty indices gained 0.8% and 0.5% respectively.

FIIs net sold stocks and stock futures worth Rs 65 cr and 41 cr respectively but net bought index futures worth Rs 35 cr. DIIs were net sellers to the tune of Rs 55 cr.

Rupee depreciated 3 paise to end at 66.725/$.

ITC plunged nearly 7% on the back of the government-appointed Arvind Subramanian panel's recommendation of a steep 40% tax on tobacco products.

OUTLOOK

Today morning Asian markets are trading with cuts of 0.5%-1% and SGX Nifty is suggesting about 55 points lower opening for our market.

In yesterday's report we had clearly indicated that "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."

Nifty, after touching a high of 7825 in the initial trade, plunged to end at 7765, vindicating our negative bias and achieving the 7760 target we had given earlier.

In Friday's report we had also mentioned that below 7760, 7700, where multiple supports on the daily chart are placed, would be the next target to eye.

A gap down opening today would take Nifty closer to that level. Upon breach of 7700, 7540, the bottom made in early September, would be the next major target to eye.

Traders are advised to hold on to short positions with the stop loss of 7860, which is the immediate resistance on the hourly chart. We had initiated "Short Nifty" recommendation around 7880 and it would not be a bad idea to book some profit around 7700.