NIFTY REBOUNDS AFTER ACHIEVING 7450 TARGET; 7620 CONTINUES TO BE IMMEDIATE HURDLE

NIFTY REBOUNDS AFTER ACHIEVING 7450 TARGET; 7620 CONTINUES TO BE IMMEDIATE HURDLE

WORLD MARKETS                             

After opening higher on the back of recovery in oil prices and Chinese data, US indices nosedived to end with cuts of 2.2%-3.4% yesterday as oil gave up earlier gains.

Nymex oil gave up earlier gains of more than 3% to settle just 0.1% higher at $30.48 a barrel after weekly U.S. crude inventory data showed a build of 234,000 barrels and a massive rise of 8.4 million barrels of gasoline. Brent briefly fell below $30 a barrel in intraday trade and settled at $30.31 a barrel. Copper gave up earlier attempts at gains to hit a fresh near-seven-year lows.

Chinese exports and imports fell by less than expected in December, leaving a trade surplus of over $60 billion for the month. The Chinese yuan held steady for a fourth-straight day, with the People's Bank of China setting the yuan midpoint fix against the U.S. dollar at 6.5630, compared to yesterday's fix of 6.5628.

The Fed's Beige Book said economic activity expanded in nine of the 12 districts. Growth was modest in most districts.

US treasury yields fell, with the 10-year yield hitting its lowest since late October and the 2-year yield touching its lowest since mid-December.

European markets, except a 0.2% lower DAX, gained 0.2%-0.8%.

Earlier, Shanghai composite erased early gains to close 2.4% lower, while other Asian markets mostly closed higher.

AT HOME

It was quite a roller coaster ride day as benchmark indices, after gaining a percent in the initial trade, nosedived two percent from the top of the day and then recouped most of the losses in the late noon trade to end higher by seven tenth of a percent. Sensex settled at 24854, up 172 points while Nifty added 52 points to finish at 7562. BSE mid-cap and small-cap indices however lost 0.5% and 1.8% respectively. BSE Energy and Auto indices climbed 1.6% and 0.9% respectively, becoming top gainers among the sectoral indices while Telecom and Capital Goods indices were the top losers, down 1.7% and 1.3% respectively.

FIIs net sold stocks worth rs 76 cr but net bought index futures and stock futures worth Rs 322 cr and 531 cr respectively. DIIs were net buyers to the tune of Rs 619 cr.

Rupee appreciated 2 paise to end at 66.845/$.

OUTLOOK

Today morning Asian markets are trading with cuts of 1.5%-3.5% with Nikkei leading the losses and SGX Nifty is suggesting about 100 points lower opening for our market.

At the risk of repeating, we have been bearish ever since immediate support of 7890 was taken out on 4th January and have been advising holding on to short postions with a trailing stop loss. Once Septmber bottom of 7540 was taken out, we have been working with downside targets of 7450, where the lower band of monthly bollinger is placed followed by 7350 where 34-month average is placed.

Yesterday, the benchmark touched a low of 7426 in the initial trade, achieving the 7450 target mentioned above, and rebounded sharply from there to end at 7562.

However, a big gap down opening today would take Nifty back in the vicinity of 7450.

As mentioned above, 7450-7350 is a very crucial support area.

On the upside, 7620 continues to be immediate hurdle on the way up, until the crossover of which the near term bias will continue to be negative.

Infosys will report its quarterly earnings today. Dollar revenue is seen falling marginally to USD 2390 mn as against USD 2392 mn in the September quarter. Rupee revenue may increase 0.7% to Rs 15748 cr and profit is expected to decline 2.9% to Rs 3300 cr. EBIT margin may shrink by 80 bps to 24.7%.