NIFTY ACHIEVES MAJOR DOWNSIDE TARGET OF 7350

NIFTY ACHIEVES MAJOR DOWNSIDE TARGET OF 7350

WORLD MARKETS                             

US markets were closed yesterday for the Martin Luther King Day holiday.

European markets ended with cuts of upto half a percent except a steeper 2.6% dip for Italy. Italian banks suffered sharp losses after reports suggested that the European Central Bank was looking into a number of euro zone banks about non-performing loans.

Nymex oil fell 48 cents to $28.94 a barrel, after hitting a low of $28.36 earlier in the session. Brent fell by 29 cents to $28.64 a barrel.

AT HOME

Bloodbath on Dalal Street continued as benchmark indices plunged 1.1% to end at 20-month low. Sensex settled at 24188, down 267 points while Nifty lost 87 points to finish at 7351. BSE mid-cap and small-cap indices nosedived 2.7% and 4% respectively. All the BSE sectoral indices ended in red with Energy and Realty indices leading on the way down, giving away 4.1% and 3.4% respectively.

FIIs net sold stocks and stock futures worth Rs 1204 cr and 484 cr respectively but net bought index futures worth Rs 958 cr. DIIs were net buyers to the tune of Rs 1123 cr.

Rupee depreciated 8 paise to end at 67.6775/$.

Kotak Mahindra Bank reported in-line with estimates 11.5% q-o-q growth in standalone net profit at Rs 635 cr. NII rose 5.2% to Rs 1766 cr. NIM remained unchanged at 4.3%.Provisions rose 33% to Rs 235 cr. Gross NPA fell marginally to 2.3% from 2.35% and net NPA improved to 0.96% from 1.05%.

Wipro reported lower-than-estimated 0.3% q-o-q growth in dollar revenue at USD 1838 mn. Net profit fell 0.06% to Rs 2234 cr and revenue rose 2.25% to Rs 12314 cr. Operational performance was slightly ahead of estimates. EBIT fell 0.5% to Rs 2482 cr and margin contracted 50 bps to 20.2%

India's exports contracted for 13th month in a row in December, falling 14.75% to $22.2 bn. Imports fell 3.88% to $33.9 bn, widening the trade deficit to $11.6 bn as against $9.17 bn in D

Asian Paints reported better-than-expected 25.8% jump in net profit at Rs 463 cr. Revenue rose 13.9% to Rs 4160 cr. EBIDTA climbed 37% to Rs 800 cr and EBIDTA margins stood at 19.2% vs 16%.

OUTLOOK

China's Q4 GDP growth has come in at 6.8%, a tad lower than estimate of 6.9%. December IIP has come in at 5.9% Vs estimate of 6%.

Asian markets are trading mixed with gains of upto 0.8% and SGX Nifty is suggesting about 20 points higher start for our market.

As you would recall, ever since 7540 support was breached, we have been working with major downside target of 7350, where 34-month average is placed.

The benchmark yesterday plunged to 7336 and closed at 7351, achieving this target and vindicating our view.

7350, being 34-month average, is very important support from long term perspective, a monthly close below which would severely damage the long term trend.

Intra month, a sustained trading below 7350 would open up the further downside till about 7100, where the 50% retracement level of the entire 5119-9119 upmove is placed. 

Immediate resistance on the hourly chart has moved lower to 7500, which should serve as the revised stop loss in short positions.

Reliance Industries and HCL Tech will report their quarterly earnings today. Reliance is expected to post a 6% q-o-q rise in net profit at Rs 6950 cr. GRMs are expected to shot up to $12 from $10.6 a barrel.