CAN JAITLEY’S LOW EXPECTATION BUDGET SPRING A SURPRISE?

CAN JAITLEY’S LOW EXPECTATION BUDGET SPRING A SURPRISE?

WORLD MARKETS                             

After a positive start on Friday, Dow and S & P 500 saw a sustained downward move through the session to end lower by 0.3% and 0.2% respectively as oil reversed earlier gains and inflation data increased expectations for a rate hike in the coming year. Nasdeq managed to gain 0.2%.

Fed's preferred inflation measure, the core personal consumption expenditures price index, which excludes food and energy, rose 1.7% in January, the largest since July 2014. The second revision on fourth-quarter gross domestic product showed a growth of 1%, higher than the initially reported 0.7% figure.

Nymex oil April future, after reaching near $35 level, retreated to end lower by 29 cents at $32.78 a barrel.

Dollar index rose 0.9%. Pound sterling fell below $1.3900 to hit lowest level since March 2009. Gold fell $18 to $1220 an ounce.

European markets, buoyed by a recovery in mining stocks and oil prices, soared 1.4%-2.2%. Also boosting the sentiment were comments from the PBOB head that the central bank still has policy tools available to combat any downside risks to the economy, highlighting potential further easing.

For the week however, US indices ended with gains of 1.5%-1.9%. European markets gained 1.3%-3.4%. Nymex oil rose 3.4% while Brent climbed 6.3%.

AT HOME

On Friday, after a gap up opening, benchmark indices gave away most of the gains in the morning trade, only to recoup most of the lost ground in the noon trade to end higher by eight tenth of a percent, breaking three-day losing streak. Sensex gained 178 points to settle at 23154 while Nifty ended at 7030, up 59 points. BSE mid-cap index gained 0.3% while the small-cap index lost 0.4%. BSE Metal index and Bankex gained 1.7% and 1.5% respectively, becoming top gainers among the sectoral indices while Telecom and Healthcare indices lost 0.7% and 0.3% respectively.

FIIs net sold stocks worth Rs 695 cr but net bought index futures and stock futures worth Rs 734 cr and 668 cr respectively. DIIs were net buyers to the tune of Rs 784 cr.

Rupee appreciated 9 paise to end at 68.62/$.

For the week, Sensex and Nifty lost 2.3% and 2.5% respectively.

Economic Survey for 2015-16, which was tabled in the Parliament today, projected a 7-7.5% GDP growth in next fiscal as against the 7.6% growth expected in current fiscal. It also said that the fiscal deficit target of 3.9% for 2015-16 seems achievable but containing it in 2016-17 will be a challenge on account of additional outgo towards 7th Pay Commission, One Rank One Pension and a slowing global economy.

OUTLOOK

Today morning, Shanghai and Hang Seng are down more than 3% and 1% respectively. Other Asian markets are flat to modestly higher and SGX Nifty is suggesting about 30 points lower opening for our market.

Finance Minister Arun Jaitley will present Union budget for FY17 in the Parliament today. Key number to watch out, as usual, would be fiscal deficit, which is expected to be kept at 3.5% of GDP, which in absolute terms will be around Rs 5.26 lac cr, down from last year's 5.5 lac cr. Net borrowings are expected at around Rs 4.8 lc cr. Gross borrowing figure 6.4-6.8 lac cr. Tax revenue growth is expected between 15-18% leading to revenue of Rs. 11-11.5 lc cr.

Stock market will keenly watch out for any changes in Long Term Capital Gains Tax, STT (Securities Transaction Tax) and DDT (Dividend Distribution Tax). There is fear that

On the PSU Bank space, bank recapitalization to the tune of Rs 30000-35000 cr is expected. Also any announcement on Stressed Assets Fund, Asset Reconstruction Company and bankruptcy code would be positive for banking space.

There is also expectation that 5% custom duty on crude oil might be reimposed which would be positive for ONGC and Cairn but negative for OMCs. Any reduction in cess on crude oil would be positive for ONGC and Oil India.

Other possible focus areas include reviving agriculture sector, launch of a mega healthcare scheme, statement of intent on new land leading policy and details on medium term fiscal roadmap.

Individual or sector specific announcement might include introduction of Green Tax, increase in import tariffs on ferrous/non-ferrous metal, increased allocation under Pradahn Mantri Sinchai Yojna.

For the individual tax payer, tax exemption limit might be raised from current Rs. 2.5 lac to 3.0 lac and housing interest exemption limit might be raised. Corporate tax rate might be cut from 30% to 29% and is expected to be accompanied with a roadmap on eliminating most of the incentives. Service tax might be raised from 14% to 16%.

Technically, as mentioned in Friday's report, 6960-7120 continues to be immediate range, a breach of which, on either side, is required for fresh direction. A breach of 6960 can take Nifty back to 6870 bottom made on 12th February. If 6870 is also taken out then 6650, the 68.2% retracement level of the entire 5119-9119 upmove, would be the next major target to eye.

On the flip side, a sustained trading above 7120 would generate a buy on the hourly chart and can take Nifty to around 7250, where the immediate previous top on the daily chart is placed.

NIFTY PLUNGES TO 6961; ACHIEVES ANOTHER DOWNSIDE TARGET

NIFTY PLUNGES TO 6961; ACHIEVES ANOTHER DOWNSIDE TARGET

WORLD MARKETS                             

After a flattish start, US indices saw a sustained northward move through the session to end with gains of 0.9%-1.3% as oil prices gained.

Nymex oil, after falling as much as 3%, reversed to close higher by 3% at $33.07 a barrel. Brent settled at $35.29 a barrel, up 2.6%. The gains came after a media report that the Venezuelan oil minister said his country, Saudi Arabia, Russia, and Qatar had settled on meeting in March.

US January orders for durable goods jumped 4.9%, beating expectations with the largest increase since March and reversing December's revised 4.6% dip.

Earlier Shanghai Composite plunged more than 6% as surging money-market rates signaled tighter liquidity and the offshore yuan declined for a fifth day.

European markets, on the back of positive set of corporate earnings, rose 1.8%-2.5%. Data showed that the inflation rate in the euro zone in January was 0.3% year-on-year, rather than a preliminary reading of 0.4%. On the flip side, U.K.'s fourth-quarter GDP was revised upwards to 0.5% quarter-on-quarter, from a preliminary reading of 0.4%.

AT HOME

Bears continued to dominate as Sensex and Nifty lost 0.5% and 0.7% in today's trade, extending the losing streak to third straight day and with Nifty closing at fresh 52-week low. In absolute terms, Sensex lost 113 points to settle at 22976 while Nifty ended at 6971, down 48 points. BSE mid-cap and small-cap indices fell 1.1% and 0.9% respectively. BSE Utilities and Power indices tumbled 2.5% and 2.2% respectively, becoming top losers among the sectoral indices while Metal and Telecom indices gained 0.4% and 0.2% respectively.

FIIs net sold stocks and index futures worth Rs 1466 cr and 2435 cr respectively but net bought stock futures worth Rs 469 cr. DIIs were net buyers to the tune of Rs 807 cr.

Rupee depreciated 17 paise to end at 68.73/$.

Sensex and Nifty lost 6% each in the February series.

Railway Minister Suresh Prabhu, in the Railway budget 2016-17 presented in the Parliament yesterday, increased plan outlay to Rs 1.21 lakh crore from Rs 1 lakh crore in the previous budget. Passenger tariffs and freight rates were left unchanged. He is targeting an operating ratio of 92%, worsening from current year's 90%, which itself was a miss from the targeted 89%.

He fell short of achieving revenue targets set in last year’s budget. As against a gross traffic receipts target of Rs 1.83 lakh cr, only Rs 1.67 lakh cr was achieved. Passenger traffic revenue stood at Rs 45384 cr as against expectation of Rs 50175 cr. Freight revenues were Rs 1.13 lakh cr, far lower than the estimated Rs 1.21 lakh cr.

For current year, he set gross revenue target of Rs 1.85 lakh cr, up 10% y-o-y. Key announcements included 3 freight corridors, establishing of 2 locomotive factories, redevelopment of 400 stations via PPP mode and 3-new high-speed trains. At least 20 projects via EPC route would be implemented in FY17. For funding these, Rs 21000 crore would be raised through IRFC bonds and Rs 18000 cr would be raised in partnership with NTPC. Institutional finance of Rs 20985 cr would also be sought.

OUTLOOK

Today morning, except a flattish Shanghai, other Asian markets are trading with gains of 0.5%-1% and SGX Nifty is suggesting about 70 points higher opening for our market.

Readers would recall that we had advise going short on Nifty on a sustained trading below 7140 for targets of  7060 and 7015, which were the 50% and 61.8% retracement levels of the recent 6869-7252 upmove. In yesterday's report we had mentioned that below 7015, Nifty can fall to 6960, which is the immediate previous bottom on the daily chart.

The benchmark touched a low of 6961 before closing at 6970, achieving the target mentioned above and vindicating our view.

Nifty is set to open with an upward gap today. However, the bias would continue to be negative until immediate hurdle on the hourly chart, placed around 7120, is taken out. 6960 on the way down, is the immediate support, a breach of which can take Nifty back to 6870 bottom.

Traders should await crossover of 6960-7120 levels for taking a fresh position on Nifty.

Chief Economic Advisor Arvind Subramanianm will present Economic Survey today.

NIFTY ACHIEVES DOWNSIDE TARGET OF 7015

NIFTY ACHIEVES DOWNSIDE TARGET OF 7015

WORLD MARKETS                             

US indices, after falling nearly a percent and half in the initial trade, saw a sustained northward move through rest of the session to end with gains of 0.3%-0.9% as the oil prices rebounded.

After falling more than 4%, Nymex oil reversed to settle up 0.9% at $32.15 a barrel. Brent gained $1.14 or 3.4% to $34.41 a barrel. The bounce back came as data showed U.S. gasoline demand over the past four weeks rose more than 5% compared to a year ago. Also supporting was data from Energy Information Administration that crude inventories showed a much smaller build, than a previous industry report.  

Economic data was weak. New home sales for January hit 494,000, below the expected 520,000, while the Markit Flash February report on services PMI came in at 49.8, down sharply from 53.2 in January and a touch below the key 50.0 level.

European markets lost 1.6%-3.1%

Gold rose $16.50 to settle at $1239 an ounce.

AT HOME

Bear rampage continued as benchmark indices nosedived a percent and third, extending the losing streak to second day. Sensex settled at 23089, down 321 points while Nifty lost 91 points to finish at 7019. BSE mid-cap and small-cap indices lost 0.8% and 1.2% respectively. Except a 0.2% rise in BSE Oil & Gas index, all the sectoral indices ended in red, with Metal and Industrial indices leading the tally, down 2.6% and 1.8% respectively.

FIIs net sold stocks and index futures worth Rs 731 cr and 491 cr respectively but net bought stock futures worth Rs 351 cr. DIIs were net buyers to the tune of Rs 606 cr.

Rupee appreciated 1 paise to end at 68.56/$.

OUTLOOK

Today morning Shanghai and Hang Seng are down about half a percent, other Asian markets are trading with modest gains and SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had mentioned that by sustaining below 7140, Nifty has generated sell on the hourly chart and that 7060 and 7015, the 50% and 61.8% retracement levels of the recent 6869-7252 pullback, would be the downside targets to eye.

The benchmark plunged touched a low of 7010 before closing at 7019, achieving both the targets mentioned above and vindicating our view.

Upon breach of 7009, next downside target to eye would be 6960, which is the immediate previous bottom on the daily chart. Immediate resistance on the hourly chart is placed at 7150, the bias would continue to be negative until that is taken out.

Railway minister Mr Suresh Prabhu will present Railway budget for Fiscal 2016-17 today. Budget outlay is expected to be hiked by about 25% to Rs 125000 cr. A bulk of this spending will be targeted at projects aimed to decongest the network like adding lines and safety upgrades. However, Prabhu will have to rely more on extra budgetary resources for building capacity for the railways. Passenger fares for upper class are expected to see a 5-10% hike while freight rates are expected to be unchanged. Prabhu is also expected to announce more freight corridors and high speed trains.

NIFTY BREAKS 7140 SUPPORT AFTER FAILING TO CROSS 7240 HURDLE

NIFTY BREAKS 7140 SUPPORT AFTER FAILING TO CROSS 7240 HURDLE

WORLD MARKETS                             

US indices plunged 1.1%-1.5% yesterday on the back of decline in oil price and a miss in the consumer confidence read.

Nymex oil ended $1.52 or 4.5% lower at $31.87 a barrel after Saudi Oil Minister Ali al-Naimi, at the CERAWeek energy conference, said that production cuts won't happen, although producers will hopefully meet in March to negotiate an output freeze. Media reports also suggested that Iran's oil minister Bijan Zangeneh termed the output freeze deal between Saudi Arabia and Russia was "a joke". Brent fell

41.44 or 4.2% to $33.24 a barrel.

Back in the US, Conference Board said its consumer confidence index fell to 92.2 in February, down from a downwardly revised 97.8 in January. The S&P/Case-Shiller 20-city composite home price index showed a 5.7% increase year-over-year in December. U.S. home resales unexpectedly rose in January, reaching a six-month high. Existing home sales increased 0.4% to an annual rate of 5.47 million units, the highest level since July.

European markets, led lower by energy and mining stocks, tumbled 1.2%-2%.

Gold gained $12.50 to $1223 an ounce.

AT HOME

Sensex and Nifty nosedived 1.6% and 1.7% respectively in yesterday's trade, washing away all the gains made in previous three sessions. In absolute terms, Sensex lost 379 points to settle at 23410 while Nifty ended at 7110, down 125 points. BSE mid-cap and small-cap indices lost 1.5% and 1.2% respectively. All the BSE sectoral indices ended in red with Bankex and Realty indices leading the tally, down 2.8% and 2.5% respectively.

FIIs net sold stocks worth Rs 290 cr but net bought index futures and stock futures worth Rs 216 cr and 867 cr respectively. DIIs were net buyers to the tune of Rs 258 cr.

Rupee appreciated 6 paise to end at 68.54/$.

OUTLOOK

Today morning key Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that ever since Nifty started recovering after making a bottom of 6869, we had been working with resistance of 7240. The benchmark went near it couple of times and on Monday went above it intraday but could not sustain there.

In yesterday's report we had mentioned that 7140 is the immediate support with the stop loss of which existing longs can be held on to.

The benchmark broke this support and fell all the way to 7090 before closing at 7110. 

With yesterday's fall, Nifty is now back in the "Sell" mode on the hourly chart. A trendline adjoining recent bottoms on the daily chart presents a support around 7090, upon breach of which 7060 and 7015, the 50% and 61.8% retracement levels of the recent 6869-7252 pullback, would be the next downside targets to eye.

Immediate hurdle on the hourly chart is placed at 7160, with the stop loss of which short positions can be held on to. Above 7160, 7240-7250 would be the next major hurdle.

RISK ON TRADE TAKES EQUITIES, OIL HIGHER; NIFTY MOVES CLOSER TO 7240 RESISTANCE

RISK ON TRADE TAKES EQUITIES, OIL HIGHER; NIFTY MOVES CLOSER TO 7240 RESISTANCE

WORLD MARKETS                             

US indices, helped by rise in oil prices and stabilization in China, soared nearly a percent and half yesterday.

US crude March future gained $1.84 or 6.2% to $31.48 a barrel. Brent rose $1.75 or 5.3% to $34.76 a barrel. The International Energy Agency, in its medium-term outlook, said that U.S. shale oil production was expected to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.

Earlier Shanghai Composite jumped more than 2% to lead gains in Asian equities.

The flash read on Markit US Manufacturing PMI for February came in at 51.0, down from the final January print of 52.4 and hitting its lowest since October 2012.

Dollar index gained about 0.8%. Gold April futures fell $21 to $1210 an ounce.

European markets gained 1.5%-3.5%. Pound sterling hit a seven-year low after popular London Mayor Boris Johnson said he would campaign for Britain to leave the European Union ahead of a June 23 referendum.

Australian mining giant BHP Billiton reported a net loss of $5.67 billion for the first half of the 2016 financial year and cut its interim dividend by 75 percent to 16 cents

AT HOME

Benchmark indices ended higher by a third of a percent after a choppy trade, extending the winning streak to fourth straight day. Sensex settled at 23789, up 80 points while Nifty added 24 points to finish at 7234. BSE mid-cap and small-cap indices gained 0.8% and 0.5% respectively. BSE Energy and Healthcare indices climbed 1.4% and 1.1% respectively, becoming top gainers among the sectoral indices while Utilities and Power indices lost 0.6% and 0.3% respectively.

FIIs net sold stocks and index futures worth Rs 657 cr and 378 cr respectively but net bought stock futures worth Rs 354 cr. DIIs were net buyers to the tune of Rs 598 cr.

Rupee fell 14 paise to end at fresh 30-month low of 68.60/$.

Effective from April 1, Cairn, PNB and Vedanta will move out of Nifty and Aurobindo, Bharti Infratel, Eicher Motors and Tata Motors DVR will move in, taking the number of stocks in Nifty benchmark index to 51.

OUTLOOK

Today morning Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a flattish start for our market.

Yesterday was one more day when Nifty moved closer to 7240 but could not cross it decisively. As we have been mentioning a sustained trading above 7240 would pave the way for the further upside till about 34-DMA, which is now placed around 7380.

Immediate support on the hourly chart has moved up to 7140, with the stop loss of which existing longs can be held on to.

Budget session of Parliament starts today and is expected to be a stormy one as the opposition has said that it wants debate on JNU issue first. Railway budget will be presented on Thursday and Union Budget on Monday.

Government will offload its 5% stake in NTPC via OFS. The floor price has been set at Rs 122 per share which will fetch around Rs 5000 cr. Institutional book will open today while Retail book will be auctioned on Wednesday.

SPECIAL REPORT-HAS THE OIL BOTTOMED OUT?

HAS THE OIL BOTTOMED OUT?

 

• AS SHOWN IN THE CHART ABOVE, WTI CRUDE SAW A MASSIVE FALL FROM A HIGH OF $107 IN JUNE 2014 TO A LOW OF $42 IN MARCH 2015. FROM THERE IT RALLIED TO $63 TILL MAY 2015, ONLY TO RESUME THE DOWNTRED AND MADE A BOTTOM OF $26 IN FEBRUARY 2016 AND IS CURRENTLY TRADING AROUND $33.
• HOWEVER, AS CAN BE CLEARLY SEEN, WHILE THE UNDERLYING MADE A LOWER BOTTOM COMPARED TO THAT MADE IN MARCH 2015, RSI (RELATIVE STRENGTH INDEX) HAS MADE A HIGHER BOTTOM. THIS IS CALLED “POSITVE DIVERGENCE” AND SUGGESTS THAT THE LAST LEG OF THE FALL IS HAVING LESSER STRENGTH AND PRICES ARE NOT WILLING TO SUSTAIN AT LOWER LEVELS.
• ON THE UPSIDE, $34.80 IS THE IMMEDIATE HURDLE, ABOVE WHICH 34 WEEK MOVING AVERAGE, PLACED AROUND $41, WOULD BE THE NEXT MAJOR TARGET. UPON CROSSOVER OF $41, $57 (20 MONTH AVERAGE) AND $62 (TOP MADE IN MAY 2015) WOULD BE NEXT UPSIDE TARGETS TO EYE.

LARGEST WEEKLY GAIN FOR NIFTY IN MORE THAN A YEAR; 7240-7125 ARE THE IMMEDIATE LEVELS

LARGEST WEEKLY GAIN FOR NIFTY IN MORE THAN A YEAR; 7240-7125 ARE THE IMMEDIATE LEVELS

WORLD MARKETS                             

Dow lost 0.1%, S & P 500 ended flat while Nasdaq gained 0.4% on Friday.

The consumer price index rose 0.3% ex-food and energy in January. The headline figure was unchanged from the previous month. Year-over-year, the core CPI advanced 2.2%, the largest rise since June 2012.

Nymex oil fell $1.13 or 3.7% to $29.64 and Brent settled down $1.32 or 3.85% at $32.96 a barrel

European markets fell 0.4%-1.2% with oil & gas stocks leading the losses. After the U.S. market close, British Prime Minister Cameron said he "negotiated a deal to give the U.K. special status in the EU" and he believed it is enough to recommend Britain stay in the union.

For the week however, US indices climbed 2.6%-3.8% with the Dow and S&P 500 posting their best week since the one ending Nov. 20. European markets soared 3.5%-5.7%, with DAX gaining the most since October 2014. Asian markets surged 3.1%-6.8% with Nikkei leading the tally and Shanghai Composite rising the most since mid-December.

AT HOME

Benchmark indices managed to end higher by a fourth of a percent after a choppy session on Friday, extending the winning streak to third straight day. Sensex settled at 23709, up 60 points while Nifty added 19 points to finish at 7211. BSE mid-cap index however lost 0.1% while the small-cap index gained 0.2%. BSE Telecom and Auto indices gained 1.4% and 0.9% respectively, becoming top gainers among the sectoral indices while Oil & Gas and Energy indices were the top losers, down 1% and 0.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 192 cr, 846 cr and 33 cr respectively. DIIs were net buyers to the tune of Rs 17 cr.

Money markets were shut on Friday for Shivaji Jayanti.

For the week, Sensex and Nifty gained 3.1% and 3.3% respectively, breaking two-week losing streak. This was the largest weekly gain for Nifty since the week ended 23^rd January 2015.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of a percent and SGX Nifty is suggesting a flattish start for our market.

In Friday's report we had mentioned that while the set-up on the hourly chart looks more conducive for an upward breakout, one can wait for the crossover of 7240 hurdle for taking fresh longs. 

That continues to be the view. Upon crossover of 7240, 7400, where the 34-DMA is placed, would be the next target to eye. Immediate support on the hourly chart has moved higher to 7125, with the stop loss of which existing longs can be held on to.

7240 CONTINUES TO BE IMMEDIATE HURDLE; 7070 NEAREST SUPPORT

7240 CONTINUES TO BE IMMEDIATE HURDLE; 7070 NEAREST SUPPORT

WORLD MARKETS                             

Dow and S & P 500 lost 0.2% and 0.5% respectively while Nadaq tumbled 1% yesterday to break 3-day winning streak.

Nymex oil came off session highs but managed to eke out gains, up 11 cents at $30.77 a barrel, after weekly crude inventories rose by 2.1 million barrels. Brent fell 25 cents to $34.25.

In major stock moves, IBM climbed 5%, countering declines in Goldman Sachs and Wal-Mart.

In economic news, weekly jobless claims came in at 262,000. The Philly Fed index came in at minus 2.8 for February. Leading indicators in January showed a decline of 0.2%, after a downwardly revised December report of a 0.3% drop.

European markets ended mixed with FTSE, Italy and Spain falling 0.8%-1.5% while DAX and CAC gained 0.9% and 0.2% respectively.

Gold gained $15 to $1226 an ounce.

AT HOME

After a gap up opening, benchmark indices plunged more than a percent from the top of the day only to recoup most of the lost ground in last hour to end with gains of more than a percent. Sensex settled at 23649, up 267 points while Nifty added 83 poins to finish at 7192.  BSE mid-cap and small-cap indices gained 0.6% each. All the BSE sectoral indices ended in green with IT and Teck indices leading the tally, up 1.9% each.

FIIs net bought stocks, index futures and stock futures worth Rs 419 cr, 443 cr and 691 cr respectively. DIIs were net buyers to the tune of Rs 712 cr.

Rupee appreciated 2 paise to end at 68.455/$.

OUTLOOK

Today morning Nikkei is down nearly 2%, other Asian markets are trading with modest cuts and SGX Nifty is suggesting about 20 points lower opening for our market.

Readers would recall that for past couple of sessions we have been mentioning that 7240 is the immediate hurdle on the hourly as well as daily chart, until the crossover of which, the bias would continue to be negative. The benchmark, after getting resisted at 7205 on Tuesday, plunged sharply to 6960 on Wednesday but rebounded smartly to end at 7108.

In yesterday's report we had mentioned that a sustained trading above 7205, the top made on Tuesday, would confirm a higher-top higher-bottom formation on the hourly chart and would pave the way for the further upmove.

The benchmark touched a high of 7215 in the morning trade but could not sustain there and finally ended at 7192 after a choppy trade.

While the set-up on the hourly chart looks more conducive for an upward breakout, one can wait for the crossover of 7240 hurdle for taking fresh longs. 34-DMA, placed around 7420, would be the next target above 7240.

7070 is the immediate support on the hourly chart, with the stop loss of which existing longs can be held on to.

BACK TO HURDLE AREA

BACK TO HURDLE AREA

WORLD MARKETS                             

Dow and S & P 500 climbed 1.6% each while Nasdaq soared 2.2% yesterday, extending the winning streak to third straight day, helped by recovery in oil and encouraging economic data.

Nymex oil rose $1.62 or 5.6% to $30.66 a barrel and Brent surged $2.70 or 8.4% at $34.88 after Iran's oil minister said that while he supported a production ceiling to stabilize oil prices - as mooted by big producers Saudi Arabia and Russia - it was the first of several steps that should be taken. An unexpected drop in crude inventories by 3.3 million barrels in the week to Feb. 12 to 499.1 million, compared with analysts' expectations for an increase of 3.9 million barrels also helped the gains.

Minutes of the January Fed meeting showed that policymakers were worried that tighter global financial conditions could hit the U.S. economy and considered changing their planned path for rate hikes in 2016.

In economic news, industrial production for January rose 0.9%, while capacity utilization was 77.1%. Producer prices unexpectedly rose last month, rising 0.1% after falling 0.2% in December. Housing starts fell 3.8% in January, while building permits fell 0.2%.

European markets climbed 2.5%-3%.

AT HOME

After plunging a percent and fifth in the initial trade, benchmark indices soared more than two percent from the bottom of the day to end higher by eight tenth of a percent. Sensex settled at 23382, up 190 points while Nifty added 60 points to finish at 7108. BSE mid-cap and small-cap indices gained 0.5% and 0.2% respectively. BSE Healthcare and Energy indices rose 1.6% and 1.4% respectively, becoming top gainers among the sectoral indices while Consumer Durable plunged 2.3%, becoming top loser, followed by 0.2% cut in Bankex.

FIIs net sold stocks and index futures worth Rs 560 cr and 213 cr respectively but net bought stock futures worth Rs 112 cr. DIIs were net buyers to the tune of Rs 385 cr.

Rupee depreciated 10 paise to end at 68.47/$, the lowest level in 30-months.

OUTLOOK

Today morning Asian markets are trading with gains of 1%-3% and SGX Nifty is suggesting about 70 points higher opening for our market.

In yesterday's report we had reiterated our view that 7240 continues to be immediate hurdle while 7056-7035, the gap created by the gap up opening on Monday, is the immediate support area, a breach of which can take benchmark back to 6870 bottom made last week.

Yesterday, Nifty broke 7056-7035 support area in the initial trade and plunged all the way to 6960 but rebounded sharply from there to end at 7108.

A gap up opening today would again take the benchmark close to 7205 top made on Tuesday. A sustained trading above 7205 would confirm a higher-top higher-bottom formation on the hourly chart and would pave way for the further upmove till 34-DMA, which is currently placed around 7440.

On the way down 6960, the bottom made yesterday, will now act as the immediate support, upon breach of which 6869, the bottom made last week, would be the next support to eye.

NIFTY RETREATS FROM HIGHER LEVELS; VINDICATES OUR CAUTION

NIFTY RETREATS FROM HIGHER LEVELS; VINDICATES OUR CAUTION

WORLD MARKETS                             

US indices, helped by gains in consumer discretionary and financials, as well as positive developments in China, climbed 1.4%-2.3% yesterday. Some part of the gains was also on account of "catch up rally" as US markets were shut on Monday.

Shanghai Composite surged more than 3% yesterday. Yuan's midpoint fix hit its strongest level of 2016 against the U.S. dollar on Monday, and weakened only slightly on Tuesday. Nikkei ended modestly higher after climbing nearly 7% on Monday.

Brent oil fell 3.6% to $32.18 a barrel and Nymex crude slipped 40 cents or 1.4% to $29.04 a barrel as hopes for a supply cut were dashed. Four of the world's largest producers did agree to freeze output at January levels, if other major exporters joined the deal.

The U.S. Empire Manufacturing Index for February came in at negative 16.64, worse than expected but better than January's print of minus 19.37.

Dollar index gained more than a percent. Gold fell $31 or 2.5% to $1208 an ounce for its worst daily drop since mid-December.

European markets, except a 0.6% higher FTSE, lost 0.1%-0.8% on the back of decline in commodity prices and mixed earnings. Closely-watched German ZEW economic expectations index came in at 1.0 for February, falling from 10.2 in January. ZEW's current conditions index for February came in at 52.3, compared to 59.7 in January. European car sales rose 6.3$ in January.

AT HOME

After gaining about half a percent in the opening trade, benchmark indices plunged more than 2% from the top of the day to end lower by about a percent and half. Sensex slipped 362 point to settle at 23192 while Nifty finished at 7048, down 115 points. BSE mid-cap and small-cap indices tumbled 2.4% and 2.2% respectively. All the BSE sectoral indices ended in red with Capital Goods and Realty indices leading the tally, down 3% each.

FIIs net sold stocks worth Rs 964 cr but net bought index futures and stock futures worth Rs 1030 cr and 452 cr respectively. DIIs were net buyers to the tune of Rs 591 cr.

Rupee depreciated 31 paise to end at 29-month low of 68.37/$.

OUTLOOK

Today morning, Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 30 points higher opening for our market.

Readers would recall that after Nifty staged a sharp rebound from our indicated 6880 downside target, we had been saying that this is just a pullback rally and traders would do well to book profit in long positions as 7240 resistance approaches.

Yesterday, the benchmark, after touching a high of 7205 in the initial trade, plunged all the way to 7048, vindicating our caution.

7240 continues to be important near term hurdle, until the crossover of which, the bias would continue to be negative.

In yesterday's report we had also mentioned that 7056-7035, the gap created by the gap up opening on Monday, is the immediate support area, a breach of which can take benchmark back to 6870 bottom made last week. That continues to be view.

Traders are advised to wait for the breach of 7240-7035 range for taking a fresh view.

7240 CONTINUES TO BE IMMEDIATE HURDLE; 7056-7035 IMMEDIATE SUPPORT

7240 CONTINUES TO BE IMMEDIATE HURDLE; 7056-7035 IMMEDIATE SUPPORT

WORLD MARKETS                             

US markets were shut yesterday in observance of President's Day.

European markets climbed 2%-3.3% on remarks made by the European Central Bank President Mario Draghi and a recovery in banks and commodities.

Draghi, in his speech before the European Parliament, said that the central bank is ready to ease policy in March, if market volatility or the effect of low energy prices impacts inflation expectations.

Brent oil rose 69 cents or 2.1% to $34.05 a barrel, extending Friday's 11% surge. Nymex added 32 cents or 1.1% to settle at $29.76. The gains were made on the back of news that ministers from Saudi Arabia, Russia, Qatar, and Venezuela would hold a previously unpublicized meeting in Doha this week, which led to speculations of a possible global output deal.

AT HOME

After a one percent gap up opening, benchmark indices kept on moving higher through the session to end with mammoth gains of nearly two and a half percent, registering the largest single day gains since January 2015. Sensex soared 568 points to settle at 23544 while Nifty ended at 7163, up 182 points. BSE mid-cap and small-cap indices climbed 3.4% each. Except a 0.6% cut in BSE Telecom index, all the sectoral indices ended in green with Metal and Capital Goods indices leading the tally, up 8.8% and 6.7% respectively.

FIIs net sold stocks worth Rs 1312 cr but net bought index futures and stock futures worth Rs 915 cr and 1240 cr respectively. DIIs were net buyers to the tune of Rs 1987 cr.

Rupee appreciated 16 paise to end at 68.07/$.

India's wholesale price inflation for January came in at negative 0.9% as against negative 0.73% in December, marking the fifteenth straight month of contraction.

India's trade deficit fell to $7.64 in January from $11.66 bn in December as imports fell 15.5% MoM and 11% YoY to $28.71 bn while exports fell 13.6% MoM and 13.6% YoY to $21.08 bn.

OUTLOOK

Today morning, Asian markets are trading with gains of upto a percent and SGX Nifty is suggesting about 30 points higher opening for our market.

After plunging from a high of 7513 on last Monday to 6869 on Friday, Nifty has nearly recovered 50% of this fall.

After this recovery, Nifty is closer to 7240 resistance we had mentioned in yesterday's report. 7240 is the bottom made in January, which will act as the first major hurdle. A sustained trading above 7240 would generate a buy on the hourly chart and next target to eye in that case would be about 7490, where the 34-DMA is placed.

7056-7034, the gap created by yesterday's gap up opening, would be the immediate support below which 6869, the bottom made last week, would be the next support to eye.

Traders would do well to lighten position as 7240 approaches.

NIFTY REBOUNDS AFTER ACHIEVING 6880 TARGET; 7240 CONTINUES TO BE IMMEDIATE HURDLE

NIFTY REBOUNDS AFTER ACHIEVING 6880 TARGET; 7240 CONTINUES TO BE IMMEDIATE HURDLE

WORLD MARKETS        

                     

Breaking a five-day losing streak, Dow and S & P 500 soared 2% each on Friday while Nasdaq rose 1.7% as European and American bank stocks as well as oil prices bounced sharply.

JPMorgan's sprinted 8.3% after CEO Jamie Dimon bought over $25 million worth of the company's stock. In Europe, Deutsche Bank rose 12% after the bank said it was buying back over $5 billion in bonds, while Commerzbank's stock gained 18% percent amid a strong earnings report.

Nymex crude added $3.23 or 12.3% to settle at $29.44 a barrel while Brent rose $2.81 or 9.4% to $32.89 a barrel on the back of after comments by an OPEC energy minister sparked hopes of a coordinated production cut.

U.S. retail sales rose 0.2% in January, above the 0.1% expected gain. Import prices in the U.S. fell 1.1%, less than expected. Consumer sentiment came in below expectations and business inventories rose 0.1% in December.

Dollar index gained 0.5%. Gold fell $8 to $1239 an ounce.

European markets climbed 2.5%-4.7% with basic resources and energy sector indices leading with gains of 8.7% and 6.3% respectively.

For the week however US indices fell 0.6%-1.4%. European markets lost 2.4%-6.8%.

AT HOME

After falling nearly a percent and half in the first half, benchmark indices recouped all the losses later to end marginally higher on Friday, breaking four day losing streak. Sensex added 34 points to settle at 22986 while Nifty ended at 6981, up 5 points.  BSE mid-cap and small-cap indices however lost 0.8% and 1.2% respectively. BSE Telecom index soared 5.6%, becoming top gainer among the sectoral indices, followed by 1.7% rise in Auto index. Capital Goods and Oil & Gas indices tumbled 3% and 2.5% respectively, becoming top losers.

FIIs net sold stocks worth Rs 398 cr but net bought index futures and stock futures worth Rs 883 cr and 102 cr respectively. DIIs were net buyers to the tune of Rs 545 cr.

Rupee appreciated 6 paise to end at 68.23/$.

India's CPI rose marginally to 5.69% in January from 5.61% in December. The IIP contracted by 1.3% in December as against a contraction of 3.4% in November, with a better performance by the mining and electricity sectors.

M & M reported worse than-expected 15% dip in net profit at Rs 820 cr. Adjusted profit however rose 23%. Revenue rose 15% to Rs 10466 cr. Operating profit rose 31% to Rs 1414 cr and margin expanded by 250 bps to 13.5%.

Sun Pharma reported better-than-expected 28% q-o-q rise in net profit at Rs 1417 cr. Revenue rose 3.6% to RS 7082 cr. Operating profit rose 11.7% to Rs 2169 cr and margin expanded 220 bps to 30.6%.

Bank of Baroda reported a net loss of Rs 3342 cr for the quarter ended December 2015 on the back of provisions of Rs 6164 cr, which was up 225%. Gross NPA rose 64% QoQ to Rs 38934 cr.

OUTLOOK

Over the weekend, People's Bank of china's governor commented that he saw no basis for continuing the depreciation of the yuan. He also dismissed speculation that Beijing would tighten capital controls to stem the surging capital outflows from the mainland.

Today morning, Shanghai Composite has opened with a cut of about 3% after a week long holiday, other Asian markets are trading with gains of 1.5%-4% with Nikkei leading the tally and SGX Nifty is suggesting about 75 points higher opening for our market.

Just to recall, we have been bearish on Nifty since 7350 was broken and have been advising holding on to short positions with a trailing stop loss.

On Friday, we had mentioned that with the breach of 7120, the 50% retracement level of the 5119-9119 upmove, next major support to eye is 6650, which is the 61.8% retracement level of this upmove. We had also said that before that, 6880 is the immediate support based on formation on daily chart.

The benchmark, after touching a low of 6869 on Friday, rebounded smartly to end at 6981 and is set to open higher today.

7240 continues to be immediate hurdle on the daily as well as hourly chart, until the crossover of which the bias would continue to be negative. 

6869, the bottom made on Friday, is the immediate support, upon breach of which 6650 would be the next major target as mentioned above.

6650 NEXT MAJOR SUPPORT BELOW 6880; 7300 IMMEDIATE HURDLE

6650 NEXT MAJOR SUPPORT BELOW 6880; 7300 IMMEDIATE HURDLE

WORLD MARKETS                             

After falling sharply intraday, US indices recovered nearly a percent from the bottom of the day but still ended with cuts of 0.4%-1.6% amidst global equity sell-off, falling oil prices and speculation about a possible OPEC production cut.

News reports citing energy minister of the United Arab Emirates said OPEC members were ready to cooperate on a production cut.

Nymex crude lost $1.24 or 4.5% to settle at $26.21 while Brent fell 78 cents or 2.5% to $30.06 a barrel. Gold, after touching a one year high of $1260.60 an ounce, settled at $1248, up 3.8% on safe haven buying.

European markets tumbled 2.4%-5.6% with bank and commodity stocks leading the losses. Sweden's central bank yesterday slashed its already negative deposit rates from -35 basis points to -50 basis points. Societe Generale nosedived 13% after fourth-quarter net income came in below expectations and the bank raised its provisions for litigation by 400 million euros. Many of the Italian lenders finished deep in the red over renewed concern over the health of the country's banking sector.

AT HOME

It turned out to be a disastrous Thursday as benchmark indices collapsed nearly three and half percent, registering the biggest daily fall since 24th August 2015 and closing at a 22-month low. Sensex nosedived 807 points to settle at 22952 while Nifty finished at 6976, down 239 points. BSE mid-cap and small-cap indices lost 3.3% and 4.6% respectively. All the BSE sectoral indices ended in red with Realty and Utilities indices leading the tally, down 5.9% and 4.9% respectively.

FIIs net sold stocks and stock futures worth Rs 1113 cr and 265 cr respectively, but net bought index futures worth Rs 415 cr. DIIs were net buyers to the tune of Rs 1222 cr.

Rupee slipped 45 paise to end at fresh 29-month low of 68.29/$.

SBI reported wore-than-expected 62% fall in quarterly profit at Rs 1115 cr. NII fell 1.2% to Rs 13606 cr. Gross NPA ratio rose 95 bps QoQ to 5.1% and Net NPA ratio rose 75 bps to 2.89%. Provisions for bad loans shot up 82% to Rs 7949 cr. Gross NPA jumped 28% q-o-q to Rs 72792 cr. Fresh slippages stood at Rs 20692 cr, three-and-a-half times higher compared to Rs 5875 cr in preceding quarter.

Tata Motors reported 2% dip in consolidated net profit at Rs 3508 cr, impacted by JLR business, weaker sales mix and higher depreciation cost. Revenue rose 2.9% to Rs 72256 cr. Consolidated operating profit fell 7% to Rs 9380 cr and margin contracted by 140 bps to 13%.

BHEL reported a massive loss of Rs 1102 cr for the October-December quarter. Revenue fell 14% to Rs 5326 cr. Operating loss stood at Rs 1639 cr against profit of Rs 294 cr. outstanding order book stood at Rs 1.09 lac crore, up 5%.

ONGC reported 73.4% fall in net profit at Rs 1286 cr, impacted by impairment loss of Rs 3994 cr due to fall in crude oil prices. Revenue fell 10.5% to Rs 18498 cr. Operating profit fell 8.3% to Rs 8043 cr but margin expanded by 110 bps

Coal India reported better-than-expected 14% rise in net profit at Rs 3718 cr. Revenue fell 6.8% to Rs 18791 cr. Operating profit surged 46% to Rs 5092 cr and margin expanded by 600 bps to 25.6%.

Hero Motocorp reported in-line with estimated 36.5% rise in net profit at Rs 796 cr. Revnue rose 6.7% to Rs 7295 cr. Operating profit shot up 39% to Rs 1140 cr and margin expanded by 360 bps to 15.6%.

OUTLOOK

Today morning, Nikkei, after yesterday's holiday, has opened down more than 4%. Other Asian markets are down 0.5%-1% and SGX Nifty is trading at 7010, suggesting about 20 point higher opening for our market.

Readers would recall that we have been bearish on Nifty ever since immediate support of 7350 was broken. 7240, the bottom made in January was our first target below which we had given level of 7120, which was the 50% retracement level of the entire 5119-9119 upmove.

The benchmark however saw a massive sell-off of 239 points yesterday to close at 6976.

With the decisive breach of 7120, the next meaningful and major support to eye is 6650, which is the 61.8% retracement level of the 5119-9119 upmove. Before that one minor support, based on formation on daily chart, comes around 6880.

Keep wearing your bear mask until immediate hurdle on the hourly chart placed at 7300 is taken out.