NIFTY ACHIEVES 34-DMA TARGET; 11925 IS THE IMMEDIATE SUPPORT

NIFTY ACHIEVES 34-DMA TARGET; 11925 IS THE IMMEDIATE SUPPORT

WORLD MARKETS

Dow and S & P 500 rose 0.3% each while Nasdaq gained 0.7% after China announced it will halve tariffs on a slew of U.S. products. Strong corporate earnings results and solid economic data also aided the sentiment.

China announced it will halve tariffs on U.S. imports totaling about $75 billion. Tariffs on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, which will take effect on Feb. 14

Twitter shares jumped more than 15% on its quarterly results while Bristol-Myers Squibb rose 2.3%.

On the data front, weekly jobless claims fell to a nine-month low last week, reaching 202,000.

Brent crude fell 23 cents, or 0.3%, to $55.05 per barrel, while WTI gained 20 cents, or 0.4%, to settle at $50.95 per barrel.

European markets gained 0.3%-1%. Germany’s new industrial orders in December dropped 2.1% month-on-month, ending the worst year for industrial orders since 2008.

AT HOME

Buoyed by the series of steps announced by the RBI, benchmark indices,  spiked up post the policy announcement to end with gains of four tenth of a percent, extending the winning streak to fourth straight day. Sensex settled at 41306, up 163 points while Nifty added 44 points to finish at 12133. BSE mid-cap and small-cap indices gained 0.8% and 0.5% respectively. BSE Telecom and Finance indices gained 1.9% and 1.2% respectively, becoming top gainers among the sectoral indices while Consumer Durables and IT indices were the top losers, down 1.1% and 0.8% respectively.

FIIs net sold stocks worth Rs 560 cr but net bought index futures and stock futures worth Rs 219 cr and 595 cr respectively. DIIs were net buyers to the tune of Rs 304 cr.

Rupee depreciated 2 paise to end at 71.20/$.

Hero MotoCorp's revenue and net profit beat estimates and margins improved for the third consecutive quarter.

RBI, while kept interest rate unchanged and kept the stance "Accomodative" as expected, announced series of steps intended to improve the flow of funds to boost the economy. These are as follows:

Banks will be given cash reserve ratio relief on incremental auto loans, retail housing loans and and all micro, small and medium enterprises loans given between Jan.30 and July 31.

The RBI said it will extend the one-time restructuring scheme for loans to MSMEs till Dec. 31. The recast scheme, announced in January last year, was to expire on March 31.

To ease the stress on the commercial real estate sector, borrowers facing repayment pressures because of situations beyond their control would be allowed to extend the date of commencement of commercial operations by a year. This extension would be allowed without classifying the loan account as a non-performing asset.

RBI also announced decision to give banks money via 1-3 year repos, which means banks can give the RBI government bonds and borrow money at 5.1% for one and three years.

RBI also abolished the daily variable rate reverse repo, and replaced it with a daily fixed rate repo plus a 14-day repo to coincide with the CRR cycle. This cost will compel banks to push down lending and deposit rates.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.2%-0.6% and SGX Nifty is suggesting a marginally lower start for our market.

Readers would recall that after Nifty crossed budget day high of 12017, we had given upside target of 34-DMA placed around 12150.

The benchmark yesterday touched a high of 12160 before closing at 12133, achieving 12150 target and vindicating our view.

12160, the top made yesterday, which coincides with 34-DMA as well as the 67% retracement level of the entire 12430-11614 fall, is the immediate hurdle to eye. Above 12160, 12272, the top made on 24th January, would be the next target.

Immediate support on the hourly chart has moved up to 11925, with the stop-loss of which, trading longs can be held on to.

Tata Steel will report its quarterly earnings today.