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.