CPI COOLS TO ALL-TIME LOW; NIFTY REBOUNDS FROM THE VICINITY OF 7785 SUPPORT

CPI COOLS TO ALL-TIME LOW; NIFTY REBOUNDS FROM THE VICINITY OF 7785 SUPPORT

WORLD MARKETS

US indices plunged about a percent and half yesterday, extending the fall to third straight session as concerns over slowing global economy persisted. S & P 500 closed below its 200 DMA for the first time after 19th November 2012.

European markets, except a modestly lower Italy, ended with modest gains. Basic resource sector gained 2.8% following strong Chinese data which showed exports surged 15.3% y-o-y in September.

Nymex crude fell 8 cents to $85.7 a barrel; Gold rose $8.3 to $1230 an ounce.

                                                             

AT HOME

After a gap down opening, benchmark indices saw a sustained upward move through the session to erase all the losses and in fact end higher by a third of a percent. Sensex gained 86 points to settle at 26384 while Nifty finished at 7884, up 24 points. BSE mid-cap and small-cap indices gained 0.5% and 0.3% respectively. BSE Metal index and Bankex gained the most among the sectoral indices, rising 1.4% each. Realty and Healthcare indices lost 1.8% and 1% respectively, becoming top losers.

FIIs net sold stocks, index futures and stock futures worth Rs 671 cr, 822 cr and 21 cr respectively. DIIs were net buyers to the tune of Rs 567 cr.

Rupee appreciated 26 paise to close at 61.09/$.

The Consumer Price Inflation for the month of September cooled off to 6.46%, the lowest since India started computing CPI in January 2012, led by lower food prices and fuel costs.

Reliance Industries reported a consolidated net profit of Rs 5972 cr for the quarter ended September, which was up 0.3% q-o-q and 1.7% y-o-y. Consolidated sales declined 4.3% y-o-y to Rs 1.13 lakh cr. Gross refining margins came in higher than estimates at USD 8.3 a barrel vs 8.7 in first quarter and forecast of 7.7-8.

SEBI yesterday barred DLF Ltd from accessing the capital market for three years for non-disclosure of its 2007 IPO documents.

OUTLOOK

Today morning Asian markets are trading mixed and SGX Nifty is suggesting about 20 points higher opening for our market.

Ever since Nifty broke the higher-top higher-bottom formation on the daily chart by closing below 7925 on 25th September, we have been working with a downside target of 7785, which is the 61.8% retracement level of the 7540-8180 upmove.

Nifty, after touching a low of 7796 yesterday, rebounded to close at 7884, validating this support once again.

7785 continues to be crucial support, a breach of which would open up the possibility of the retest of the 7540 bottom.

7972, the top made last week, which is also the immediate previous top on the daily chart, continues to be important resistance to eye.

This makes 7785-7972 a no-trading zone, a breach of which, on either side is required to take a fresh view on Nifty.

Bajaj Auto will report its quarterly earnings today.

WPI inflation for September would come out today and is expected to ease to 3.1% from 3.74% in August.

ASIA STARTS THE WEEK LOWER ON GLOBAL GROWTH CONCERNS; NIFTY LIKELY TO TEST 7785 SUPPORT

ASIA STARTS THE WEEK LOWER ON GLOBAL GROWTH CONCERNS; NIFTY LIKELY TO TEST 7785 SUPPORT

WORLD MARKETS                             

US indices fell between 0.7%-2.3% on Friday as computer-chip manufacturers led the losses after Microchip Technology lowered its sales outlook and Standard & Poor's downgraded its outlook for France to negative from stable.

U.S. import prices fell in September for a third month as the price of petroleum prices fell and a stronger dollar made it cheaper for Americans to purchase European goods.

European markets fell between 1%-2.4%. August industrial production for France came in flat on the previous month, below estimates. Comparative figures for Italy showed a 0.3% rise, but they also missed expectations.

Nymex crude rose 0.3% to $86 a barrel; Gold fell 0.3% to $1222 an ounce.

For the week, Dow lost 2.7%, S & P 500 3.1% and Nasdaq 4.5%, extending the losing streak to third straight week.

AT HOME

After Thursday's dramatic upmove, Friday was marked by equally dramatic reversal as benchmark indices, after a gap down opening, saw further losses through the session to end lower by a percent and quarter. Sensex lost 340 points to settle at 26297 while Nifty finished at 7860, down 101 points. BSE mid-cap and small-cap indices lost 1.4% and 1.1% respectively. Except a 2.3% and 1.2% rise in BSE IT and Teck indices, all other sectoral indices ended in red with Metal index leading the tally, plunging 4.1%, followed by 2.8% cut in Auto index.

Infosys surged after reporting better-than-estimated quarterly earnings and declaring an unexpected 1:1 bonus. Dollar revenues rose 3.1% sequentially to $2201 mn vs expected 2.9% growth. Rupee revenue rose by 4.5% to Rs 13342 while profit rose 7.3% to Rs 3096 cr. Operating profit margin expanded by 96 bps to 26.1%. The company maintained full year dollar revenue growth guidance at 7-9%.

FIIs net sold stocks, index futures and stock futures worth Rs 720 cr, 1464 cr and 176 cr respectively. DIIs were net buyers to the tune of Rs 558 cr.

Rupee depreciated 30 paise to close at 61.35/$.

August industrial output, as represented by IIP, grew at merely 0.4% as against the expectation of a 2.4% uptick.

For the week, Sensex and Nifty lost 1% each, extending the losing streak to third straight week.

OUTLOOK

China has reported a trade surplus of $31 bn for September. Imports are up 7% as against the expectation of a dip of 2.7% while exports are up 15.3%, beating the estimated 11.8% rise.

Asian markets are trading with cuts ranging from 0.5%-1% and SGX Nifty is suggesting about 50 points lower opening for our market. Crude oil is down more than 1%, extending losses from last week, after Kuwait's oil minister reportedly said that the Organization of the Petroleum Exporting Countries (OPEC) is unlikely to cut production to support falling prices. Also, top exporter Saudi Arabia said that it was comfortable with oil prices below $90 a barrel.

Ever since Nifty closed below 7925 on 25th September, a lower-top lower-bottom formation on the daily chart has been in place and as we have been telling, until this formation is negated, the short term trend will continue to be negative.

In that sense, 7972, the top made last week, which is also the immediate previous top on the daily chart, would be the important resistance to eye.

On the way down, 7785, the 61.8% retracement level of the entire 7540-8180 upmove, continues to be crucial support, a breach of which would open up the possibility of the retest of the 7540 bottom.

India's inflation based on CPI for September would be released today and is seen further decelerating to 7.2% from 7.8% in August.

Reliance Industries and Indusind Bank will report their quarterly earnings today.

GROWTH WORRIES PULL WORLD EQUITIES BACK; INFY, IIP IN FOCUS AT HOME

GROWTH WORRIES PULL WORLD EQUITIES BACK; INFY, IIP IN FOCUS AT HOME

WORLD MARKETS

US indices nosedived 2% yesterday, erasing all and more of the previous day's rally, on concerns over slowing growth in Europe and hawkish comments from some Fed members.

Data from Germany showed that exports dropped 5.8% in August, the largest decline since the financial crisis. Remarks from ECB President Mario Draghi also weighed. Speaking at the Brookings Institute, he reiterated that quantitative easing would not be effective without economic reforms and warned of deflation risks.

In the US, weekly jobless claims came in at 287000 vs 294000 estimate with the four-month average hitting an eight-year low. Wholesale inventories rose 0.7% in August, compared to expectations of a 0.3% gain.

European markets, except a 0.1% gain in DAX, fell between 0.6%-1.3% with Italy leading the tally after the Bank of Italy reported that bad loans at Italian banks had grown by 20% in August to a record high.

The Bank of England left its benchmark interest rate unchanged as expected, as wage growth and productivity remained surprisingly weak, lagging the country's economic recovery.

Brent crude dropped below $90 a barrel for the first time since 2012 and U.S. crude hit $85.3 a barrel, a 22-month low. Gold rose 1.6% to $1225 an ounce.

Fed Vice Chairman Stanley Fisher and San Francisco Fed President John Williams both said they expect higher interest rates by mid-2015.

                                                             

AT HOME

After a gap up opening, benchmark indices extended the upmove through the trading session to end with hefty gain of a percent and half, registering the biggest single day rise since 18th September and breaking three day losing streak. Sensex surged 390 points to settle at 26637 while Nifty finished at 7960, up 118 points. BSE mid-cap and small-cap indices climbed 1.8% and 1.6% respectively. All the BSE sectoral indices ended in green with Capital Goods and Realty indices leading the tally, putting on 3% and 2.6% respectively.

FIIs net sold stocks and stock futures worth Rs 21 cr and 71 cr respectively but net bought index futures worth Rs 566 cr.

Rupee appreciated 35 paise to end at 61.05/$.

OUTLOOK

Today morning Asian markets are trading with cuts in the vicinity of a percent and SGX Nifty is suggesting about 70 points lower opening for our market.

In yesterday's report we had mentioned that 7930 is the immediate resistance, a crossover of which is required to generate a buy on the hourly chart, which in turn can open up the space for the further upside till 8030.

The benchmark opened with a gap up yesterday, took out 7930 hurdle in the initial trade itself, moved further higher to touch a high of 7972 and finally settled at 7960.

Today however Nifty is set to open with a gap down in the vicinity of 7900. 7886-7870, the gap created by the gap up opening yesterday, would be the immediate support to eye.  On the way up 7972, the top made yesterday would be the immediate hurdle.

Traders are advised to keep a stop loss of 7870 in trading longs. Fresh longs should be built only above 7972.

Tech major Infosys will kickstart the earning season today. Dollar revenue for the September quarter is expected to rise 2.9% sequentially to $2195 mn. Rupee revenue is expected to grow by 4.2% to Rs 13307 cr and PAT is expected at Rs 2985 cr, a growth of 3.4%. EBIDTA margin is expected to improve to 25.6% from 25.1%. Markets will however focus on comments from the new CEO Vishal Sikka on strategy and capital allocation.

IIP for August too would be released today and is expected to improve to 2.4% from July's 0.5%.

US INDICES SOAR ON FED MINUTES; BRENT OIL AT 27-MONTH LOW

US INDICES SOAR ON FED MINUTES; BRENT OIL AT 27-MONTH LOW

WORLD MARKETS

US indices soared between 1.6%-1.9%, recovering from previous Tuesday’s sell-off, on the back of minutes of the latest Fed meeting.

The report showed that the Federal Reserve staff cut their growth outlook due to the higher dollar, as a number of committee participants had concerns with global weakness. The minutes showed a heated debate on forward guidance. Some members argued that current language painted the wrong picture on the timing of rate hikes and pushed for rate hikes to be more dependent on economic data.

Analysts say the minutes gave the impression that no action will be taken at the Fed's October meeting.

European markets lost between 0.2%-1%. European airlines posted sharp declines, with analysts citing the spread of Ebola to Spain as a key reason for the fall.  Sentiment was further dampened after the Organization for Economic Cooperation and Development (OECD) said it expected the euro zone economy to slow over the coming months.

Nymex crude lost $1.5 to end at $87.3 a barrel, its lowest close since April 2013. Brent oil fell 73 cents to $90.6, the lowest since June 2012. Gold lost $6.4 to $1206 an ounce.

                                                             

AT HOME

Benchmark indices ended marginally lower after a range bound but choppy session, closing at the lowest level since 14th August. Sensex lost 25 points to settle at 26247 while Nifty finished at 7843, down 10 points. BSE mid-cap index lost 0.2% while the small-cap index gained 0.1%. BSE IT and Healthcare indices nosedived 3.4% and 3.3% respectively, becoming top losers among the sectoral indices while Oil & Gas and Capital Goods indices gained 1.7% and 1.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1441 cr, 196 cr and 679 cr respectively. DIIs were net buyers to the tune of Rs 663 cr.

Rupee appreciated 3 paise to close at 61.3975/$.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of half a percent and SGX Nifty is suggesting about 35 points higher opening for our market.

Ever since Nifty confirmed a lower-top lower-bottom formation on the daily chart by closing below 7925 on 25th September, we had been working with a downside target of 7785, which is the 61.8% retracement level of the 7540-8180 upmove.

The benchmark touched a low of 7816 yesterday, coming in very close to this target, from where it recovered to end at 7843. Moreover many sectoral indices like CNX Bank, Commodity, Infra, Metal and Realty have formed positive divergence on the daily chart which suggests that the selling pressure has abated.

Therefore, traders are advised to book profit in short positions and wait for the breach of 7785 for taking fresh negative view on Nifty. On the way up, 7930 is the immediate resistance, a crossover of which is required to generate a buy on the hourly chart, which in turn can open up the space for the further upside till 8030. This makes 7785-7930 a no-trading zone for Nifty.

US EQUITIES PLUNGE ON GLOBAL GROWTH CONCERNS; NIFTY ON TRACK TO ACHIEVE 7785 TARGET

US EQUITIES PLUNGE ON GLOBAL GROWTH CONCERNS; NIFTY ON TRACK TO ACHIEVE 7785 TARGET

WORLD MARKETS                             

US indices plunged a percent and half yesterday, with the S & P 500 touching 8-week low amid concerns about slowing global growth and the potential impact on coming third-quarter earnings from U.S. corporations.

The IMF downgraded its global growth forecast for 2014 3.3%, down 0.1% from its July forecast. For 2015, the growth is expected to be 3.8%.

German industrial output fell by 4% in August, marking the worst fall in five-and-a-half years. This came a day after the country's industrial orders had their largest monthly decline since the global financial crisis in 2009.

European markets fell between 1%-2%.

Nymex crude fell $1.5 to $88.8 a barrel to close at their lowest in more than two years; Gold rose $5.1 to $1212 an ounce.

AT HOME

After a flattish start, benchmark indices saw a sustained down move through the session to end with deep cuts of more than a percent. Sensex slumped 296 points to settle at 26272 while Nifty finished at 7852, down 93 points. BSE mid-cap and small-cap indices lost 0.9% and 0.8% respectively. All the BSE sectoral indices ended in red with Metal and Capital Goods indices leading the tally, giving away 2.6% and 1.8% respectively.

India's HSBC Services PMI rose to 51.6 in September from 50.6 in August, reversing a slowdown seen in the previous two months. The composite PMI too improved to 51.8 from 51.6.

FIIs net sold stocks and stock futures worth Rs 333 cr and 304 cr respectively but net bought index futures worth Rs 152 cr. DIIs were net buyers to the tune of Rs 328 cr.

Rupee gained 18 paise to close at 61.43/$.

The IMF has upgraded India’s FY15 GDP growth to 5.6% from the interim forecast of 5.4% made in July and estimates FY16 growth to be at 6.4%.

OUTLOOK

China's HSBC Services PMI has come in at 53.5, down from 54.1 in August.

Asian markets are trading with average cuts of half a percent and SGX Nifty is suggesting about 30 points lower opening for our market.

We have been bearish on Nifty for quite some time and have been advising a "sell-on-rallies" approach until the benchmark negates the lower-top lower-bottom formation on the daily chart.

We have also been working with a downside target of 7785, which is the 61.8% retracement level of the 7540-8180 upmove.

Today's gap down opening would see Nifty reach very near to this level. 7785 would be a crucial support to eye a breach of which would open up the possibility of the retest of the 7540 bottom.

Immediate resistance on the hourly chart has moved lower to 7940, which should serve as the new stop loss for trading shorts.

NIFTY LIKELY TO OPEN LOWER, VINDICATING OUR NEGATIVE BIAS; 8038 CONTINUES TO BE IMMEDIATE RESISTANCE

NIFTY LIKELY TO OPEN LOWER, VINDICATING OUR NEGATIVE BIAS; 8038 CONTINUES TO BE IMMEDIATE RESISTANCE

WORLD MARKETS

US indices fell between 0.1% and 0.5% yesterday on caution ahead of the release of minutes from the Federal Reserve's last meeting on Wednesday, with the bank on track to conclude bond purchases this month.

European markets, except a 0.4% lower Italy, gained between 0.1%-0.6%. Data showed that industrial orders in Germany posted the worst fall this August since the height of the global financial crisis. The poor data however stoked hopes of further stimulus from the European Central Bank (ECB).

Gold rose 1.2% to $1207 an ounce; Nymex crude gained 0.7% to $90.3 a barrel.

                                                             

AT HOME

Benchmark indices ended lower by about a fourth of a percent on Wednesday after trading in a narrow range through the trading session, ahead of a long break. Sensex slipped 62 points to settle at 26567 while Nifty finished at 7945, down 19 points. BSE mid-cap and small-cap indices lost 0.2% and 0.4% respectively. Except a 1.9% and 1.4% rise in BSE IT and Teck indices, all other sectoral indices ended in red with Oil & Gas and FMCG indices leading the tally, giving away 1.6% and 1.3% respectively.

India's HSBC manufacturing PMI fell to a nine-month low of 51 in September from 52.4 in August.

FIIs net sold stocks worth Rs 63 cr but net bought index futures and stock futures worth Rs 72 cr and 125 cr respectively. DIIs were net buyers to the tune of Rs 156 cr.

Rupee appreciated 13 paise to close at 61.61/$.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is trading at 7940, suggesting about 40 points lower start compared to Wednesday's close.

For past couple of sessions we have been mentioning that Nifty has confirmed a lower-top lower bottom formation on the daily chart and until this formation is negated, the near term view will continue to be negative. We had also indicated that 8038, the 61.8% retracement level of the recent 8160-7842 fall, is the immediate resistance to eye. Nifty, after touching a high of 8031 on Tuesday, plunged to close the week at 7945 and is set to open further lower today, vindicating our view.

7842, the bottom made on 26th September is the nearest support below which 7785, the 61.8% retracement level of the 7540-8180 upmove, would be the next important support to eye. 8038 continues to be immediate resistance.

India's HSBC Services PMI for September would be released today.

COMMODITIES PLUNGE ON DOLLAR STRENGTH; NIFTY RETREATS FROM ANTICIPATED RESISTANCE

COMMODITIES PLUNGE ON DOLLAR STRENGTH; NIFTY RETREATS FROM ANTICIPATED RESISTANCE

WORLD MARKETS

US indices fell between 0.2%-0.3% yesterday, ending September month with modest cuts.

Economic reports came in below expectations. Conference Board's consumer confidence index fell to 86 in September from 93.4 the month before and below an expected 92.5. The S&P/Case-Shiller index of property prices also came in below expectations, rising 6.7% from July 2013. The Chicago PMI for September came in at 60.5, less than the expected 61.9 estimate.

European markets, except a 0.4% lower FTSE, gained between 0.5% and 1.8%. Euro zone inflation slowed to 0.3% in September, largely as expected. Euro zone unemployment was unchanged from last month at 11.5%, and also in line with expectations. Meanwhile, German retail sales in August saw their sharpest rise in more than three years.

Dollar index soared to 85.92, marking the highest monthly close since June 2010. Nymex crude plunged 3.6% to $91.2 a barrel, posting biggest daily decline since 2012. Brent crude fell $2.5 to $94.7, its lowest since June 2012. Gold lost 0.6% to $1212 an ounce.

For the month, Dow lost 0.3%, S & P 500 fell 1.6% and Nasdaq was down 1.9%.

Later in the day, U.S. confirmed one case of the Ebola virus.

                                                             

AT HOME

After gaining nearly a percent in the morning trade, benchmark indices saw a sudden fall in the noon trade, erasing all the intraday gains and ended little changed. Sensex settled at 26630, up 33 points while Nifty gained 6 points to finish at 7965. BSE mid-cap and small-cap indices gained 0.1% each. BSE  Consumer Durable and Healthcare indices gained the most among the sectoral indices, rising 1.4% and 1.1% respectively while Realty and Metal indices lost 2.7% and 1% respectively.

RBI, as expected, left key rates unchanged and also sent a  strong signal that it will refrain from cutting interest rates until it is confident that consumer inflation can be reduced to a target of 6% by January 2016.

FIIs net sold stocks worth Rs 486 cr but net bought index futures and stock futures worth Rs 232 cr and 323 cr respectively. DIIs were net buyers to the tune of Rs 201 cr.

Rupee fell 21 paise to close at 61.47/$.

India's core sector growth for August picked up with eight core sector industries growing by 5.8% against 4.7% in same month last year and 2.7% in July.

Fiscal deficit for April-August period touched 75% of the full year target.

OUTLOOK

China's official manufacturing PMI has come in unchanged from the previous month at 51.1.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points lower opening for our market.

For past two days, we have been mentioning that while Nifty had rebounded from an important trendline support placed around 7840, the near term trend will turn bullish only after the resumption of the higher-top higher-bottom formation on the daily chart. We had also mentioned that 8038, the 61.8% retracement level of the recent 8160-7842 fall, is the immediate resistance to eye.

Nifty, after touching a high of 8031, plunged to close at 7965 yesterday, vindicating our view.

8038 continues to be important immediate resistance, a crossover of which is required to negate the immediate bearish view. 7842, the low made last week, continues to be immediate support.

Auto companies will report their September sales figures. 

Indian markets will remain shut tomorrow, on Friday and on Monday on account of Mahatma Gandhi Jayanthi, Dussehra and Bakri Id respectively.