NIFTY SET TO ACHIEVE 7240 TARGET

NIFTY SET TO ACHIEVE 7240 TARGET

WORLD MARKETS                             

After falling sharply in the morning trade, US indices rebounded nearly a percent from the bottom of the day to end marginally lower with Dow and S & P 500 losing 0.1% while Nasdaq fell 0.3%.

Nymex oil fell $1.24 or 4.2% to $28.53 after the data from American Petroleum Institute (API) showed U.S. crude stockpiles rose by 2.4 million barrels in the week to Feb. 5 to 503.4 million. Brent fell $2.04 or 6.2% to $30.85.

U.S. wholesale inventories declined 0.1% in December, less than expected. Also, the latest JOLTS survey showed job openings rose in December.

U.S. 10-year yields traded at 1.73%, after briefly dipping below 1.7%. In Japan, 10-year yields turned negative for the first time ever.

Dollar index fell 0.5%.

European markets lost 1%-3.2% with Italy leading the losses. Basic resources sector was the worst performer with 5% cut. On the data front, December German industrial output fell 1.2% month-on-month.

AT HOME

After a big gap down opening, benchmark indices saw a rangebound but choppy trade through rest of the session and finally ended with deep cuts of more than a percent. Sensex slumped 266 points to settle at 24021 while Nifty ended at 7298, down 89 points. BSE mid-cap and small-cap indices lost 1.9% and 1.3% respectively. Except a 0.2% each gain in BSE Oil & Gas and Utilities indices, all the sectoral indices ended in red with IT and Teck indices leading the tally, down 3.4% and 3% respectively.

FIIs net sold stocks and stock futures worth Rs 680 cr and 1294 cr respectively but net bought index futures worth Rs 1294 cr. DIIs were net sellers to the tune of Rs 174 cr.

Rupee appreciated 3 paise to end at 67.90/$.

PNB plunged nearly 7% after posting disappointing quarterly earnings with higher provisions and further worsening in asset quality. Net profit fell 93% y-o-y to Rs 51 cr. NII slipped 3% to Rs 4120 cr. Gross NPA ratio worsened 211 bps q-o-q to 8.47% and Net NPA ratio rose 187 bps to 5.86%. Provisions surged 100% to Rs 3775 cr.

Dr Reddy reported a marginal growth in net profit at Rs 579 cr, impacted by Rs 30 cr forex loss. Income rose 3.2% to Rs 3968 cr. EBIDTA rose 8% to Rs 1023 cr and margin stood at 25.8% vs. 24.62%.

OUTLOOK

Today morning Nikkei is trading with cuts of more than 2% and SGX Nifty is suggesting about 70 points lower opening for our market.

In yesterday's report we had mentioned that a sustained trading below 7350 would open up the possibility of the retest of the 7240 bottom made in January.

The benchmark opened below the 7350 mark and plunged all the way to 7275 before closing at 7298.

A gap down opening today would take Nifty in the vicinity of the 7240 mark. Upon sustained trading below 7240, next support to eye would be about 7120, where the 50% retracement level of the entire 5119-9119 upmove is placed.

Immediate resistance on the hourly chart is placed at 7400, with the stop loss of which trading shorts should be held on to.

Cipla, ACC and Ambuja Cement will report their quarterly earnings today.

Markets would watch out for Fed Chair Yellen's testimony on Wednesday and Thursday where she is expected to acknowledges the weakness in the US and global economy.