NIFTY AGAIN RESISTED NEAR 8185; 8040 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY AGAIN RESISTED NEAR 8185; 8040 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices soared 1.1%-1.6%, with the Dow and S & P 500 hitting new record highs. The small caps Russell 2000 and the S&P Mid Cap 400 too closed at record highs.

Pharma stocks however underperformed after Trump said he will bring down drug prices.

WTI oil tumbled 2.3% to $49.77 per barrel and Brent fell 1.7% to $53 despite as doubts over an agreed upon OPEC production cut persisted, despite a reported drawdown of 2.4 million barrels by the Energy Information Administration.

US dollar index fell 0.21%. U.S. Treasury yields fell across the board, with the two-year note yield trading around 1.10% and the benchmark 10-year yield near 2.35%.

European markets climbed 0.8%-2.1% with focus shifting to the European Central Bank's (ECB) upcoming meeting, where further monetary stimulus is expected. Basic resources sector gained the most followed by auto and banking stocks. Germany's industrial production recovered only marginally in October, increasing by 0.3% on the month and up by 1.2% on the year.

AT HOME

After rising about half a percent, benchmark indices nosedived post RBI policy announcement to end with cuts of about half a percent. Sensex lost 156 points to settle at 26237 while Nifty finished at 8102, down 41 points. BSE mid-cap and small-cap indices fell 0.2% and 0.5% respectively. BSE Healthcare and Realty indices tumbled 1.7% and 1.5% respectively, becoming top loser among the sectoral indices while Oil & Gas and Auto indices added 0.9% and 0.4% respectively, becoming top gainers.

FIIs net bought stocks and index futures worth Rs 194 cr and 212 cr respectively but net sold stock futures worth Rs 348 cr. DIIs were net sellers to the tune of Rs 56 cr.

Rupee appreciated 27 paise to end at 67.63/$.

The RBI governor Urjit Patel-headed six-member monetary policy committee (MPC), decided to keep key lending-the repo rate- unchanged at 6.25%, dashing hopes of lower borrowing costs to arrest the demonetization-induced slide in spending and investment. RBI however lowered its growth forecast for 2016-17 to 7.1% from 7.6%. The MPC also decided to restore the cash reserve ratio (CRR) to 4% from December 10.

In the post policy press conference, RBI said that so far, people have deposited Rs. 11.55 lakh crore worth of "demonetised" notes.

OUTLOOK

Japan's third-quarter economic growth was revised down to 1.3% year-on-year, from the preliminary reading of 2.2%.

Except a flattish Shanghai, other Asian markets are trading with gains of 0.3%-0.8% and SGX Nifty is suggesting about 60 points higher start for our market.

In yesterday's report we had reiterated the view that 8185, the upper level of the gap created by the gap down opening on Friday, is the immediate hurdle to eye. The benchmark, after touching a high of 8190, slipped to end at 8102 but is set to open higher today.

8190, the top made yesterday is now the immediate hurdle to eye above which 8250, the top made last week, would be the bigger resistance to tackle.

8040, the 61.8% retracement level of the recent 7916-8250 pullback, continues to be immediate support.

A European Central Bank's interest rate decision is due today, where the central bank is expected to announce a six-month extension to its bond-buying program, particularly after a Sunday referendum in Italy left the country's banks in a vulnerable spot.