7680 IMMEDIATE SUPPORT; 7965 ABOVE 7850

7680 IMMEDIATE SUPPORT; 7965 ABOVE 7850

WORLD MARKETS                             

Dow and S & P 500 rose half a percent each while Nasdaq gained 0.8% yesterday on the back of a bounce in oil prices and major stocks such as Apple.

Apple closed up 2.4%, recovering losses of 1.92% from Wednesday when it unveiled new products.

Nymex oil rose $1.77 or 4% to $45.92 a barrel, more than reversing Wednesday's 3.9% decline, despite weekly inventory numbers showing a greater-than-expected build of 2.6 million barrels. Metals, including copper and gold, also gained about half a percent.

Initial jobless claims fell 6,000 to a seasonally adjusted 275,000 for the week ended Sept.5. It was the 27th straight week that claims remained below the 300,000 threshold, which is usually associated with a strengthening labor market.

U.S. import and export prices posted their largest drop in seven months.

Earlier Shanghai Composite and Nikkei ended lower by 1.4% and 2.5% respectively amidst weak economic data. Core machinery orders in Japan fell by 3.6% in July, while in China, the producer price index fell by 5.9%, signaliing that deflation remains a risk for the world's second largest economy.

European markets lost 0.9%-1.8%.  The Bank of England kept interest rates on hold at 0.5%, after policymakers decided it was as it was too early to tell whether the turmoil in China would impact the U.K.

AT HOME

After plunging just under 2% in the initial trade, benchmark indices recouped most of the losses through  the session to end lower by just four tenth of a percent. Sensex settled at 25622, down 97 points while Nifty lost 30 points to finish at 7788. BSE mid-cap index ended higher by 0.6% while the small-cap index lost 0.4%. BSE Consumer Durable and Teck indices lost 1.8% and 0.8% respectively, becoming top losers among the sectoral indices while Capital Goods and auto indices gained 0.9% and 0.7% respectively.

FIIs net sold stocks and index futures worth Rs 121 cr and 273 cr respectively but net bought stock futures worth Rs 312 cr. DIIs were net buyers to the tune of Rs 67 cr.

Rupee depreciated 3 paise to end at 66.43/$.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 15 points higher opening for our market.

In yesterday's report we had mentioned that the immediate support on the hourly chart is placed at 7700, a sustained trading below which would open up the possibility of retest of the 7540 bottom made on Monday.

The benchmark, touched a low of 7678 in the initial trade but did not sustain there and saw a sustained recovery through the day to end at 7788.

7700-7680 continues to be immediate support, a breach of which would derail the nascent recovery we have witnessed over past three days. 7850 is the immediate hurdle on the hourly chart, above which 7965, the 38.2% retracement level of the entire 8655-7540 fall, would be the next target to eye.

Trading longs can be held with the stop loss of 7680.

India's IIP for July will be released today and is expected to show a reading of 3.41%, slightly lower than June's 3.8% figure.

RECOVERY FADES

RECOVERY FADES

WORLD MARKETS                             

After opening with gains of nearly a percent, US indices saw a relentless fall through the session and finally ended lower by 1.1%-1.4%, failing to extend a rally in global markets on the back of selling pressure in Apple and energy-related counters.

The higher opening was attributed to big gains in Asia where Nikkei jumped 7.7% for its biggest one-day gain since 2008 and China's Shanghai Composite index closed up 2.3%. China's Ministry of Finance said the government will strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system, adding to other steps to re-energize sputtering growth. Japanese stocks also rallied on back of comments by Prime Minister Shinzo Abe that the government aims to lower the corporate tax rate.

Apple closed nearly 2% lower, after initially spiking more than 1.5% amid its afternoon event, at which the company unveiled new products.

Energy stocks led the losers after Nymex oil tumbled $1.79 or 3.9% to $44.15 a barrel. Brent also fell more than 3% to trade below $48 a barrel. Gold fell $19 to $1102 an ounce.

Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings in July was a record 5.8 million, according to the U.S. Bureau of Labor Statistics. The hiring rate declined to 3.5%. Weekly mortgage applications fell 6.2% as refinancings slid.

European markets gained 0.3%-1.7%.

AT HOME

Benchmark indices extended Tuesday's pullback by climbing more than a percent and half in today's trade on the back of positive global cues. Sensex soared 402 points to settle at 25720 while Nifty finished at 7819, up 130 points. BSE mid-cap and small-cap indices gained 1.9% and 1.8% respectively.

All the BSE sectoral indices ended in green with Metal and Auto indices leading the tally, up 3.5% and 2.9% respectively.

FIIs net sold stocks worth Rs 452 cr but net bought index futures and stock futures worth Rs 389 cr and 1016 cr respectively. DIIs were net buyers to the tune of Rs 1195 cr.

Rupee appreciated 14 paise to end at 66.40/$.

Finance Minister Arun Jaitley yesterday said that the government has given up plans to reconvene a parliament session to secure approval for a common goods and services tax (GST) because of lack of political support.

The Union cabinet on yesterday approved rules that will allow telecom operators to buy and sell unused spectrum among themselves, a move that may spur consolidation in India’s fragmented telecom industry and also help improve service quality by reducing the number of dropped calls.

Government also cleared Gold Monetisation Schme, under which, gold in any form can be deposited with banks for a period of one to 15 years that will earn interest while redemption will be at the prevailing value at the end of the tenure. Also approved was a Sovereign gold bond, aimed at providing an alternative to physical gold. Such bonds will be issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of five years to seven years with a rate of interest to be calculated on the value of the metal at the time of investment.

The Union Cabinet also approved National Offshore Wind Energy Policy which will pave the way for development of this renewable source of energy, including setting up of projects and research in the area.

The Union Cabinet also approved the proposal to allow 100% foreign direct investment (FDI) in white labelled automated teller machines (ATM) through the automatic route. The decision is likely to result in faster growth of the white labelled ATMs--set up by private non-banking entities—as flow of foreign funds will now get expedited.

OUTLOOK

In Japan, core machinery orders fell 3.6% in July from a month earlier, missing expectations for a rise of 3.7%. China's consumer price index (CPI) rose 2% in August from a year earlier, beating expectations for a 1.8% gain and up from 1.6% in July. 

Asian markets are trading with cuts of 1%-3.5% with Nikkei leading the tally. SGX Nifty is suggesting about 80 points lower opening for our market.

In yesterday's report we had mentioned that while traders can exit short positions once the high made in first hour is crossed, the overall trend continues to be bearish and any upmove should be considered just a pullback from the oversold territory and not a trend reversal.

The benchmark, after touching a high of 7846, closed at 7819 and is set to open with a big gap down today.

Immediate support on the hourly chart is placed at 7700 a sustained trading below which would open up the possibility of retest of the 7540 bottom made on Monday.

7845, the double top on hourly chart, is the immediate hurdle above which 7965, the 38.2% retracement level of the entire 8655-7540 fall, would be the next target to eye.

WORLD EQUITIES GET A CHINA BOOST

WORLD EQUITIES GET A CHINA BOOST

WORLD MARKETS                             

US indices soared 2.4%-2.7% yesterday, taking its cues from a late-day surge in Chinese equities.

Earlier the Hang Seng ended up 3.28% and the Shanghai Composite closed almost 3% higher, brushing aside the soft data on reports that railway projects worth almost $11 billion have been approved. Data released yesterday showed China's dollar-denominated exports declined by 5.5% year-over-year in August, while imports tumbled 13.8%.

Japan's blue-chip Nikkei stock index however closed down 2.4% and move into negative territory for the year so far as the weak trade numbers fueled concerns about demand for Japanese exports from China.

Back in the US, the National Federation of Independent Business said its Small Business Optimism Index rose modestly in August, up half a point to 95.9. The gain suggests the economy continued to grow at a steady clip halfway through the third quarter. July consumer credit increased by $19.10 billion, while June's figure was revised up $27.1 billion from $20.7 billion.

European markets gained 0.6%-1.6% with DAX leading the tally after data showed that both exports and imports in Germany hit a record high in July. Official statistics from the European Commission showed that the euro zone economy grew faster than expected in the second quarter, expanding by 1.5% year-on-year, versus the previous estimate of 1.2%.

Nymex oil settled down 11 cents at $45.94 a barrel.

AT HOME

After a lackluster morning trade, benchmark indices saw a big surge in the noon trade to end higher by 1.7%. Sensex settled at 25318, up 424 points while Nifty rose 129 points to finish at 7688. BSE mid-cap and small-cap indices gained 1% and 0.6% respectively. Except a 1.2% and 0.8% cut in BSE Consumer Durable and FMCG indices respectively, all the sectoral indices ended in green with Bankex leading the tally, up 3.6%, followed by 3.2% each rise in Power and Capital Goods indices.

FIIs net sold stocks and stock futures worth Rs 660 cr and 279 cr respectively but net bought index futures worth Rs 802 cr. DIIs were net buyers to the tune of Rs 447 cr.

Rupee bounced back 27 paise to end at 66.55/$.

In a high level meeting with ministers and industry leaders Prime Minister Narendra Modi yesterday asked India Inc to increase risk-taking appetite and step up investments even as industry leaders pressed for interest rate cut and more policy action to improve ease of doing business.

OUTLOOK

Today morning Asian markets are trading with gains of 1%-5% with Nikkei leading the tally and SGX Nifty is suggesting about 90 points higher opening for our market.

In yesterday's report we had mentioned that the immediate hurdle on the hourly chart has now moved lower to 7735, which should serve as the revised stop loss for short positions.

A gap up opening today would take the benchmark above this level. 

If one takes the recent 8092-7540 fall, the 50% and 61.8% retracement levels of this fall, placed at 7815 and 7880 respectively, would be the upside level to eye.

Traders would do well to exit short positions once the high made in first hour is crossed.

Overall trend however continues to be bearish and this upmove should be considered just a pullback from the oversold territory and not a trend reversal.

NIFTY AT 14-MONTH LOW; RUPEE TUMBLES TO 2-YEAR LOW

NIFTY AT 14-MONTH LOW; RUPEE TUMBLES TO 2-YEAR LOW

WORLD MARKETS                             

US markets were shut yesterday for labor day holiday.

Key European markets gained 0.6%-0.8%.

Earlier, Shanghai Composite ended lower by 2.5% after wild intraday swings. China's National Bureau of Statistics revised its annual economic growth rate for 2014 to 7.3% from the previously released figure of 7.4%.

Oil fell more than 3%, hit by weaker Chinese equities and record North Sea crude production data that added to global oversupply concerns. Brent fell $1.98 or 3.7% to $47.76 a barrel. Nymex fell $1.80 to $44.25 a barrel.

AT HOME

After gaining nearly two third of a percent in the initial trade, benchmark indices nosedived nearly two percent from the top of the day to end lower by a percent and fourth. Sensex settled at 24894, down 308 points while Nifty lost 96 points to finish at 7559. This was the lowest close for both the indices since July 2014. BSE mid-cap and small-cap indices lost 2.2% and 1.8% respectively. All the BSE sectoral indices ended in red with Healthcare and Metal indices leading the tally, down 2.6% and 2.3% respectively.

FIIs net sold stocks and index futures worth Rs 827 cr and 1087 cr respectively but net bought stock futures worth Rs 207 cr. DIIs were net buyers to the tune of Rs 504 cr.

Rupee plunged 36 paise to end at 66.82/$, marking a 2-year low.

OUTLOOK

Japan's revised GDP for the second quarter shrank an annualised 1.2%, better than the initial estimate of a 1.6% contraction.

Asian markets are trading mixed with changes of upto half a percent and SGX Nifty is suggesting about 25 points higher start for our market.

In yesterday's report we had mentioned that a breach of 7626, the low made last week, can result in second round of panic selling and next major support would come only around 7100 where the 34-month average as well as the 50% retracement level of the entire 5119-9119 upmove are placed. We had also advised holding on ot short positions with the stop loss of 7820.

The benchmark, after touching a high of 7705 in the initial trade, fell sharply to end at 7559.

We continue to maintain our bearish stance. Immediate hurdle on the hourly chart has now moved lower to 7735, which should serve as the revised stop loss for short positions.