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.