NIFTY SET TO BREACH 7540 SUPPORT; TRAIL STOP LOSS TO 7700

NIFTY SET TO BREACH 7540 SUPPORT; TRAIL STOP LOSS TO 7700

WORLD MARKETS                             

US indices plunged 1% on Friday to end the year's first trading week with sharp losses as global economic concerns outweighed an above-expectation jobs number for December.

The last nonfarm payrolls report for 2015 showed creation of 292,000 jobs, much more than the expected 200,000 new jobs. The unemployment rate was 5%. Average hourly earnings declined one cent, for an annualized gain of 2.5%.

Nymex oil fell 11 cents or 0.33% to $33.16 a barrel on Friday and down more than 10% for the week.

European markets fell 0.7%-1.7%.

Earlier, Asian stocks closed mixed, with the Nikkei slightly lower but the Shanghai Composite up nearly 2%. The People's Bank of China said it would further liberalize interest rates and make the yuan more international and keep the currency basically stable, among other policy measures.

For the week, US indices plunged 6%-7.3%, posting their worst weekly fall since 2011. European markets nosedived 5.3%-8.3% with DAX leading on the way down. Asian markets lost 6.7%-10% with Shanghai at the top.

AT HOME

FIIs net sold stocks, index futures and stock futures worth Rs 1237 cr, 356 cr and 367 cr respectively. DIIs were net buyers to the tune of Rs 1004 cr.

Rupee appreciated 30 paise to end at 66.63/$.

OUTLOOK

Today morning Asian markets have opened with cuts of 1%-2.5% and SGX Nifty is suggesting about 80 point lower opening for our market.

In Friday's report we had mentioned that 7550 and 7540 are the bottoms made in September and December respectively and continue to be important support levels to eye. We had also said that upon sustained trading below 7540, next major supports to eye would be the lower band of monthly bollinger placed around 7450 and the 34-month moving average placed around 7350.

The benchmark rose 33 points on Friday to close at 7601 but the gap down opening today would take it below 7540 mark. As mentioned above, upon sustained trading below 7540, next target to eye would be around 7450, which is the lower band of monthly bollinger. Below 7450, 7350, where the 34-month average is placed, would be the crucial support to eye.

Immediate hurdle on the hourly chart would have moved lower to around 7700 after today's gap down opening, which should serve as the new stop loss for trading shorts.

NIFTY PLUNGES TO 7557, VINDICATES OUR VIEW

NIFTY PLUNGES TO 7557, VINDICATES OUR VIEW

WORLD MARKETS                             

US indices nosedived 2.3%-3% yesterday on the back of sell-off in Chinese markets and lower oil prices. Devaluation of the Chinese yuan and speculation of significantly more weakening in the currency also weighed on sentiment.

Trading in China was suspended after the CSI 300 index - the benchmark index against which China's new circuit breakers are set - tumbled more than 7% in early trade, triggering the market's circuit breaker for a second time this week. Shanghai Composite had tumbled 7.32% by at the time of the halt, while the Shenzhen Composite plummeted 8.34%.

Also weighing on the sentiment was the move by People's Bank of China to set the yuan reference rate at 6.564, its lowest since 2011 and the largest daily change since Aug. 13. Media reports suggested that China's central bank is under increasing pressure from policy advisors to let the yuan currency fall quickly and sharply, by as much as 10-15%, as its recent gradual softening is thought to be doing more harm than good.

Later in the day, China Securities Regulatory Commission announced suspension of its recently implemented circuit breaker system.

Nymex oil fell to a new 12-year low before paring losses slightly and closing at $33.27 a barrel, down 70 cents or 2.1%. Brent fell 45 cents to $33.78 a barrel. Copper fell more than 3.5% in intraday trade to hit its lowest since Nov. 2015.Gold climbed to a nine-week high at $1108 an ounce.

European markets tumbled 1.1%-2.3%. Euro zone unemployment rate fell to 10.5% in November, its lowest level in more than four years. In addition, economic sentiment in the euro zone rose to 106.8 points in December from 106.1 in November, according to a European Commission poll.

AT HOME

China inspired carnage continued in world equities and our own indices nosedived more than two percent yesterday, extending the losing streak to fourth straight day and closing at a four-month low. Sensex slipped 555 points to settle at 24852 and Nifty finished at 7568, down 173 points. BSE mid-cap and small-cap indices tumbled 2.6% and 2.9% respectively. All the BSE sectoral indices ended in red with Realty and Metal indices leading the tally, falling 4.5% and 3.7% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1052 cr, 1566 cr and 82 cr respectively. DIIs were net buyers to the tune of Rs 191 cr.

Rupee depreciated 11 paise to end at 66.93/$.

OUTLOOK

Today, Shanghai, after opening higher, dipped into the red and is trding around zero line. Other Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points lower opening for our market.

In yesterday's report we had clearly mentioned that a breach of 7710, the 61.8% retracement level of the 7550-7973 upmove, would open up the possibility of the retest of the 7550 bottom.

The benchmark opened below the 7710 support and plunged all the way to 7557 before closing at 7568, nearly achieving target mentioned above and vindicating our view.

7550 and 7540 are the bottoms made in September and December respectively and continue to be important support levels to eye. Upon sustained trading below 7540, next major supports to eye would be the lower band of monthly bollinger placed around 7450 and the 34-month moving average placed around 7350.

7720-7675, the gap created by the gap down opening yesterday, would act as the immediate hurdle on the way up, with the stop loss of which short positions should be held on to.

ASIAN MARKETS MELT UNDER CHINESE HEAT; NIFTY SET TO BREAK 7710 SUPPORT

ASIAN MARKETS MELT UNDER CHINESE HEAT; NIFTY SET TO BREAK 7710 SUPPORT

WORLD MARKETS                             

US indices nosedived 1.1%-1.5% yesterday, weighed down by continued concerns about global economic growth, low oil prices and increased geopolitical tensions.

Energy closed down 3.6% to lead all S & P 500 sectors lower after Nymex oil fell $2 or 5.6% to $33.97 a barrel, its lowest since December 2008. Brent settled at $34.23, its lowest since June 2004.

North Korea yesterday said it had successfully tested a hydrogen bomb and said that it won't give up nuclear capability unless U.S. drops its hostile foreign policy towards the country.

The World Bank cut its 2016 global growth forecast to 2.9%, citing pressure from "weak growth among major emerging markets."

Back in the US, Markit Services PMI for December stood at  54.3, below November's final print of 56.1. ISM non-manufacturing came in at 55.3, down from November's 55.9. New orders for manufactured goods slipped 0.2% after a downwardly revised 1.3% gain in October. December ADP report showed creation of 257,000 payrolls. U.S. November trade deficit came in at $42.4 billion. Imports of goods fell to their lowest in nearly five years, outpacing a drop in exports.

China Caixin Services PMI for December came in at 50.2, down 1 point from November and the lowest in 17 months. The Chinese yuan plunged to a five-year low in offshore trading, sharply widening the gap with the mainland-traded yuan.

European markets tumbled 1%-2.7%

Gold gained $13.50 to $1092 an ounce.

AT HOME

After trading with a positive bias in the morning trade, benchmark indices sold-off in the late noon trade to end lower by about six-tenth of a percent, extending the losing streak to third straight day. Sensex settled at 25406, down 174 points while Nifty lost 44 points to finish at 7741. BSE mid-cap and small-cap indices lost 0.3% and 0.4% respectively. BSE FMCG and Metal indices fell 1.6% and 1.5% respectively, becoming top losers among the sectoral indices while Energy and Oil & Gas indices gained 1.4% and 0.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 243 cr, 559 cr and 57 cr respectively. DIIs were net buyers to the tune of Rs 577 cr.

Rupee depreciated 23 paise to end at 66.82/$.

India's Nikkei/Markit Services PMI surged to a 10-month high of 53.6 in December from November's 50.1 read.

OUTLOOK

Today, Chinese Markets hit the lower circuit of 5% soon after opening and hit another circuit of 7% after the 15-minute cool-off period. Trading has been halted for rest of day. Other Asian markets are trading with cuts of 1.5%-3% and SGX Nifty is suggesting about 70-80 points lower opening for our market.

Just to reiterate, we have maintained our negative bias on Nifty ever since immediate support of 7890 was breached and have been working with downside target of 7710, which is the 61.8% retracement level of the recent 7550-7973 pullback rally.

The benchmark touched a low of 7721 yesterday, nearly achieving this target, before closing at 7741.

However, a gap down opening today will take the benchmark even below this support and a sustained trading below 7710 would open up the possibility of the retest of the 7550 bottom.

Immediate resistance on the hourly chart has moved lower to 7850. The short term bias will continue to be negative until that is taken out.

7710 NEXT DOWNSIDE TARGET, 7900 IMMEDIATE HURDLE

7710 NEXT DOWNSIDE TARGET, 7900 IMMEDIATE HURDLE

WORLD MARKETS                             

Dow and S & P 500 gained 0.1% and 0.2% respectively while Nasdaq, weighed down by a 2.5% cut in Apple, ended 0.25% down.

The People's Bank of China (PBOC) injected nearly $20 billion into money markets, its largest cash injection since September. China Securities Regulatory Commission (CSRC) announced plans for new rules to further restrict share sales by major stakeholders in listed companies, and said it would further tweak the circuit breaker mechanism amid criticism that it had fueled Monday's sell-off.

Nymex oil fell 79 cents or 2.2% to $36 a barrel and Brent eased 80 cents to $36.42 a barrel.

European markets gained 0.3%-1.2%. The intervention by the People's Bank of China (PBoC) helped push metal prices slightly higher, pushing the basic resource sector up sharply, after it took a battering on Monday. Eurozone inflation for December came in at 0.2%, in-line with November's reading but lower than the forecast of 0.3% uptick.

After Monday's 7% fall in Shanghai Composite, the index, yesterday, swung in a 4% range before closing down about 0.3%.

AT HOME

Benchmark indices ended modestly lower after a choppy trade, extending the losing streak to second day. Sensex settled at 25580, down 43 points while Nifty lost 7 points to finish at 7785. BSE mid-cap and small-cap indices however gained 0.6% and 0.8% respectively.  BSE Metal and Basic Material indices climbed 2.2% and 1.6% respectively, becoming top gainers among the sectoral indices while Telecom and IT indices lost 0.6% and 0.4% respectively.

FIIs net sold stocks and stock futures worth Rs 352 cr and 179 cr respectively but net bought index futures worth Rs 34 cr. DIIs were net buyers to the tune of Rs 13 cr.

Rupee appreciated 2 paise to end at 66.59/$.

OUTLOOK

Today morning Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

We had advised going short on Nifty below 7890 on Monday and had given targets of 7760 and 7710 yesterday, which are the 50% and 61.8% retracement levels of the 7550-7973 upmove.

Yesterday, the benchmark touched a low of 7763 before closing at 7785.

7710 would continue to be next downside target once Nifty starts trading below 7760.

7900 continues to be immediate hurdle.

India's December Services PMI data would be released today.

NIFTY TUMBLES AFTER BREAKING 7890 SUPPORT

NIFTY TUMBLES AFTER BREAKING 7890 SUPPORT

WORLD MARKETS                             

US indices fell 1.5%-2% on the first trading day of the year, weighed by sell-off in Chinese markets, renewed concerns of global economic slowdown and increased tensions in the Middle East.

The Shanghai and Shenzhen exchanges ended the trading session early after the CSI 300 dropped 7%, triggering a circuit breaker. The halt was the first implementation of the new circuit breaker rule announced in September. The sell-off was on the back of weak Caixin manufacturing PMI data and reduction of positions in Chinese small caps ahead of the Friday expiration of a six-month selling ban imposed on the major shareholders of listed companies. The Chinese yuan also weakened to hit its lowest since 2011.

In another development, Saudi Arabia, the world's biggest oil exporter, cut diplomatic ties with Iran on Sunday in response to the storming of its embassy in Tehran. The protest followed Saudi Arabia's execution of a prominent Shiite cleric

Back in the US, December ISM Manufacturing Index came in at 48.2, down from November's 48.6 print to its lowest since June 2009. Construction spending fell for the first time in nearly one-and-a-half years, down 0.4% in November.

Nymex oil fell 28 cents, or 0.8% to $36.76 a barrel, giving up an earlier spike to above $38.30 a barrel. Brent fell 5 cents to $37.24 a barrel. Gold rose $15 to $1075 an ounce.

European markets tumbled 2.4%-4.3% with DAX leading the tally on the way down. Markit's final manufacturing PMI for the euro zone rose to 53.2 in December, hitting a 20-month high.

AT HOME

Dragged down by the negative global cues, viz. a sharp sell-off in Chinese stocks and heightened geopolitical tensions between Iran and Saudi Arabia, benchmark indices nosedived more than 2% yesterday, registering the steepest fall since 1st September. Sensex sank 538 points to settle at 25623 while Nifty finished at 7791, down 172 points. BSE mid-cap and small-cap indices lost 1.2% and 1.1% respectively.  All the BSE sectoral indices ended in red with Telecom index and Bankex leading the tally, down 3.2% and 2.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 667 cr, 40 cr and 259 cr respectively. DIIs were net sellers to the tune of Rs 223 cr.

Rupee plunged 47 paise, suffering the steepest fall in 9 weeks, to close at 66.61/$.

India's Nikkei's Manufacturing Purchasing Managers' Index fell to a 28-month low of 49.1 in December from November's 50.3. It was also the first reading below the 50 threshold that separates growth from contraction since October 2013.

OUTLOOK

Today morning, Shanghai Composite, after opening around 3% lower, has recovered and is now trading in green. Other Asian markets are trading with modest gains and SGX Nifty is suggesting about 20 points higher opening for our market.

In yesterday's report we had clearly mentioned that 7890 continues to be immediate support, a breach of which would generate a sell on the hourly chart and would pave the way for the further correction. We had also advised going short below 7890.

The benchmark broke 7890 support and plunged all the way to 7781 before closing at 7791, vindicating above mentioned view.

In yesterday's fall, Nifty broke the 34-DMA support placed around 7820 as well as the 38.2% retracement level of the recent 7550-7973 upmove placed at 7812. 50% and 61.8% retracement levels of the 7550-7979 upmove, placed around 7760 and 7710 respectively, are the next downside targets to eye.

7900 is the immediate resistance on the hourly chart is the immediate hurdle above which 7980 would be a tougher hurdle to eye.

NIFTY NEARLY ACHIEVES 7980 TARGET; 7890 IS THE IMMEDIATE SUPPORT

NIFTY NEARLY ACHIEVES 7980 TARGET; 7890 IS THE IMMEDIATE SUPPORT

WORLD MARKETS                             

US and European markets were shut on Friday for the New Year's day.

AT HOME

After falling about half a percent in the initial trade, benchmark indices recouped all the losses and some more through the session to end higher by nearly a fifth of a percent. Sensex settled at 26161, up 43 points while Nifty added 17 points to finish at 7963. BSE mid-cap and small-cap indices gained 0.9% each. Except a 0.3% each cut in BSE IT and Teck indices, all the sectoral indices ended in green with Realty and Industrial indices leading the tally, up 2% and 1.5% respectively.

FIIs net bought stocks worth Rs 228 cr but net sold index futures and stock futures worth Rs 75 cr and 219 cr respectively. DIIs were net sellers to the tune of Rs 81 cr.

Rupee appreciated 2 paise to end at 66.14/$.

Maruti Suzuki reported 8.5% growth in December sales at 1.19 lakh units. Eicher reported 49% growth at 40453 units. M & M showed 4% growth at 37915 units. Ashok Leyland reported a 31.4% increase at 12209 units. TVS Motors reported 4% uptick at 2.02 lac units. Tata Motors showed 4% decline at 39973 units.

For the week, Sensex and Nifty gained 1.2% and 1.3% respectively, extending the winning streak to third straight week.

OUTLOOK

China's Caixin Manufacturing PMI for December has come in at 48.2, down from 48.6 in November, contracting for a tenth month and coming in below a forecast for 49.

Today morning Asian markets are trading with cuts of 0.5%-2% and SGX Nifty is trading around 7930, which suggests around 50 points lower opening as Nifty future closed at 7982 on Friday.

At the risk of repeating, we have been working with the target of 7980 ever since 7850 hurdle was taken out.

The benchmark on Friday touched a high of 7973 before closing at 7963, nearly achieving the 7980 target and vindicating our view.

Now 7980, as we have been mentioning, is the top made in December and also the immediate previous top on the daily chart and hence an important hurdle to negotiate. A decisive crossover of it can take the benchmark to around 8120, where the 34-month moving average is placed.

7890 continues to be immediate support, a breach of which would generate a sell on the hourly chart and would pave the way for the further correction.

Traders are advised to wait for the crossover of 7980 for taking a fresh positive view on Nifty. Similarly a breach of 7890 should be awaited for initiating short positions.

NIFTY MOVES TOWARDS 7980 TARGET; TRAIL STOP LOSS TO 7890

NIFTY MOVES TOWARDS 7980 TARGET; TRAIL STOP LOSS TO 7890

WORLD MARKETS                             

US indices fell 0.9%-1.1% on last day of calendar 2015 in light volume trade.

Nymex oil rose 44 cents or 1.2% to $37.04 a barrel. Brent. The U.S. oil drilling rig count showed a decline of 2, according to Baker Hughes.

The Chicago Purchasing Managers' Index (PMI) came in at 42.9 for December, down from 48.7 in November. Weekly jobless claims came in at 287,000, up from 267,000 the week before.

 In Europe, German and Italian markets were closed for New Year's EVE. FTSE, CAC and IBEX fell 0.5%, 0.9% and 1.1% respectively.

For 2015, S&P 500 fell 0.7% after three-straight years of double-digit gains. Dow Jones industrial average lost 2.2%. For both, this was the worst year after 2008 when S & P 500 and Dow lost 38.5% and 30% respectively. The Nasdaq composite however closed up more than 5.5% for the year.

European markets, boosted by the massive asset-buying program launched by the European Central Bank (ECB) in March, ended 2015 with gains. France gained 8.5% and Germany was up 9.5%. Without the benefits of the ECB's stimulus, the FTSE 100 closed lower on the year, down by 4.9%.

Nymex oil fell more than 30% for 2015, for its first two-year losing streak since the late 1990s. Gold lost more than 10% for the year, posting three-straight years of decline for the first time since 1998.

AT HOME

Benchmark indices ended higher by six tenth of a percent on the last day of the December derivative series as well as the calendar 2015. Sensex settled at 26118, up 158 points while Nifty added 50 points to finish at 7946. BSE mid-cap and small-cap indices gained 0.4% and 0.5% respectively. BSE Realty and Telecom indices gained 1.5% and 1.4% respectively, becoming top gainers among the sectoral indices while Consumer Durable and Healthcare indices lost 0.2% each.

FIIs net bought stocks worth Rs 1123 cr but net sold index futures and stock futures worth Rs 630 cr and 197 cr respectively. DIIs were net sellers to the tune of Rs 258 cr.

Rupee appreciated 24 paise to end at 66.15/$.

For calendar 2015, Sensex and Nifty lost 5% and 4.1% respectively.

India's core sector output fell 1.3% in November, marking its worst performance in over a decade and first fall in 7 months, due to sharp fall in steel, crude oil, natural gas and cement.

Data released yesterday showed that the Centre’s fiscal deficit was ₹4,83,523 crore between April and November 2015 or 87% of the Budget estimate. Though this is higher than the 74% in the previous month, it is much lower than the corresponding period a year ago when its fiscal deficit was 99% of the Budget estimate.

OUTLOOK

Today, most of the Asian markets are shut for New Year's Day. SGX Nifty is suggesting about 20 points lower opening for our market.

Ever since Nifty took out 7850 hurdle on 23rd December, we have been working with the target of 7980, the top made in early December.

The benchmark, after a correction on Wednesday, rebounded yesterday to touch a high of 7956 before closing at 7946, moving towards this target.

7980 continues to be upside target as well as the important near term hurdle to eye.

7890, the low made in the initial trade yesterday, will now act as the immediate support, which should serve as the stop loss for trading longs.