STAY SHORT WITH THE STOP LOSS OF 7930 FOR TARGETS OF 7760, 7700

STAY SHORT WITH THE STOP LOSS OF 7930 FOR TARGETS OF 7760, 7700

WORLD MARKETS                             

US indices plunged nearly a percent and half yesterday as treasury yields climbed amidst worries the Fed would raise rates while the economy is still weak and ECB president Mario Draghi announced monetary policy measures that fell short of market expectations.

Fed chair Janet Yellen said in a testimony before Congress that economic data since October backs the central bank's expectations of an improved job market. She added the bank will need to be cautious about raising rates form near zero, but added that - even after an initial increase - Fed funds rates would remain accommodative.

ECB cut deposit rate by 10 basis points to negative 0.3% and said it would extend its asset purchase program to at least March 2017 but did not increase the amount, falling short of expectations.

Dollar index fell more than 2% to below 98 after hitting more than 12 year high of 100.51 Wednesday. Euro climbed above $1.09 to hit its highest since Nov. 3. The German 10-year yield jumped above 0.6%.

Nymex oil rose $1.14 or 2.8% to $41.08 a barrel, helped by a weaker dollar and some speculation that Saudi Arabia would propose a deal to balance oil markets with help from non-OPEC members in 2016 in today's OPEC meeting.

US ISM nonmanufacturing for November came in at 55.9, down from 59.1 in October. Domestic factory orders rose 1.5% in October, beating expectations of 1.3%. Initial jobless claims rose to 269,000.

European markets nosedived 2.3%-3.6%

AT HOME

Benchmark indices tumbled nine tenth of a percent in yesterday's trade, extending the losing streak to second straight day. Sensex settled at 25887, down 231 points while Nifty lost 67 points to finish at 7864. BSE mid-cap and small-cap indices lost 0.4% and 0.5% respectively. Except a 0.4% rise in BSE Realty index, all the sectoral indices ended in red with FMCG and Consumer Durable indices leading the tally, down 1.5% and 1.4% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 611 cr, 509 cr and 222 cr respectively. DIIs were net buyers to the tune of Rs 521 cr.

Rupee depreciated 6 paise to end at 66.6525/$.

India's Nikkei Services PMI for November hit a 5-month low of 50.1, easing from 53.2 in October.

OUTLOOK

Today morning Asian markets are trading with cuts of 0.5% to 1.5% and SGX Nifty is suggesting about 50 points lower opening for our market.

In yesterday's report we had mentioned that a sustained trading below immediate 7890 support would generate a sell on the hourly chart and 7760, where the trendline adjoining recent bottoms on the hourly chart is placed, would be the next downside target to eye in that case. We had also advised going short if the bottom made in first hour is breached.

The benchmark broke 7890 support and plunged all the way to 7853 before closing at 7864 and is set to open around 7800, vindicating above mentioned view.

7760 continues to be immediate support below which 7700, where the multiple bottoms on the daily chart are placed, would be the important support to eye.

Traders are advised to hold on to short positions with the stop loss of 7930, where the immediate hurdle on the hourly chart is placed.

Key data to watch out today would be the US non-farm payroll for November where addition of 2.01 lac jobs is expected after last month's blowout 2.71 lac reading.