NIFTY FAILS TO CROSS 8435 HUMP; 8370 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY FAILS TO CROSS 8435 HUMP; 8370 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

Dow lost 0.1% while S & P 500 and Nasdaq gained 0.2% and 0.3% respectively after digesting remarks from Yellen, corporate earnings and economic data.

In prepared remarks, Yellen said the U.S. economy was closing in on the central bank's goals, giving it impetus to start reducing the extreme levels of support it has provided over the past decade.

Fed released its latest Beige Book, which said that a pickup in manufacturing, "widespread" reports of labor shortages and improving business investment set the stage for the Fed's December rate hike.

In economic news, the Consumer Price Index rose 0.3%, in line with expectations, putting it up 2.1% y-o-y. This was also the first time CPI rose above 2% since 2014. Industrial production grew 0.8% in December and the NAHB survey for January showed homebuilder sentiment pull back slightly.

Remarks from Yellen, stronger U.S. data and a positive Beige book pushed the dollar to 101.30, up nearly a percent. Treasury yields rose with benchmark 10-year note yielding 2.42%.

Goldman Sachs and Citigroup posted better-than-expected earnings.

Oil slipped with Brent down 2.8% at $53.92 a barrel and WTI down 2.7% at $51.08.

European markets, except a 0.1% lower CAC, gained 0.3%-0.5%.

AT HOME

After gaining about three fourth of a percent in first hour and half, benchmark indices gave away quite a bit of them through the session to end just marginally higher. Sensex settled at 27255, up 22 points while Nifty added 19 point to finish at 8417. BSE mid-cap and small-cap indices rose 0.4% and 0.6% respectively. BSE Metal and Basic Material indices climbed 2.3% and 1.9% respectively to become top gainers among the sectoral indices while Telecom and Oil & Gas indices were the top losers, down 0.9% and 0.2% respectively.

FIIs net bought stocks and stock futures worth Rs 319 cr and 245 cr respectively but net sold index futures worth Rs 896 cr. DIIs were net buyers to the tune of Rs 245 cr.

Rupee depreciated 13 paise to end at 68.08/$.

The Cabinet yesterday approved plans to divest a 25% stake in each of the five fully-owned public sector general insurance companies by listing these on stock exchanges.

OUTLOOK

Today morning Nikkei is up more than a percent while Hang Seng and Shanghai are down about four tenth of a percent. SGX Nifty is suggesting a flattish start for our market.

In yesterday's report we had reiterated the view that a decisive crossover of 8435, where 34-week moving average is placed, is required for a fresh upmove.

The benchmark, after touching a high of 8460, slipped to end at 8417, failing to close above the 8435 hurdle.

Upon a decisive crossover of this hurdle, next target to eye would be 8560, which is the 61.8% retracement level of the 8970-7893 fall.

Meanwhile, 8370 is where Nifty has been taking support for past couple of days. If that is taken out, next support to eye would be 8300-8275 region where 8300 is 200-DMA and 8275 is the top made in December.

Traders are advised to hold on to long positions with the stop-loss of 8370.

Axis Ban and Yes Bank will report their quarterly earnings today.