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.