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.