7490 IS THE IMMEDIATE HURDLE

7490 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

After falling nearly a percent and half in the initial trade, US indices saw a sharp rebound through the session as the oil surged, which helped Dow and S & P 500 close 1.1% and 0.5% higher while Nasdaq ended 0.3% lower.

WTI crude gained $2.40 or 8% to $32.28 a barrel and Brent climbed $2.32 or 7% to $35.04 a barrel on news that Russia may be open to a deal with OPEC in order to cut production.

The ISM non-manufacturing index's January reading came in at 53.5, below the expected 55.1 and the lowest reading since December 2013. ADP reported that private U.S. payrolls jumped 205,000 last month, above a consensus estimate of 195,000.

Dollar index fell 1.6% as weak U.S. economic data suggested a March interest rate hike from the data-dependent Federal Reserve was unlikely.

European markets lost 1.3%-2.8%

Earlier, Nikkei and Hang Seng ended with deep cuts of 3.2% and 2.3% respectively. Shanghai lost 0.4%.

AT HOME

After a gap down opening, benchmark indices lost some more weight through the choppy session to end with deep cuts of a percent and third, extending the losing streak to third straight day. Sensex slumped 316 points to settle at 24223 while Nifty finished at 7362, down 94 points. BSE mid-cap and small-cap indices lost 1.3% and 2.2% respectively. All the BSE sectoral indices ended in red with Power and Capital Goods indices leading the tally, down 4.2% and 2.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 357 cr, 352 cr and 296 cr respectively. DIIs were net sellers to the tune of Rs 145 cr.

Rupee fell 10 paise to end at 68.0725/$.

India's Nikkei/Markit Services PMI surged to 54.3 in January from December's 53.6, marking a 19-month high. Composite PMI rose to an 11-month high of 53.3 from 51.6.

OUTLOOK

Today morning, except a half a percent lower Nikkei, other Asian markets are trading with gains of 0.5%-1.5% and SGX Nifty is suggesting about 50 points higher opening for our market.

For past couple of sessions we had been mentioning that 7460 was the immediate support, a sustained trading below which would generate a sell on the hourly chart. After this support was breached on Tuesday, in yesterday's report, we had given downside target of 7380, which was the 61.8% retracement level of the recent 7240-7600 upmove. We had also said that a sustained trading below would open up the possibility of the retest of 7240 bottom.

The benchmark, after a gap down opening, fell further to touch a low of 7350 before closing at 7362.

While Nifty would open with a gap up today, the bias would continue to be negative until immediate hurdle of 7490 is taken out. On the way down 7240 would be the next downside target once 7350, the bottom made yesterday, is breached.

Bajaj Auto and Tata Steel will report their quarterly earnings today.