EQUITIES, OIL REBOUND FROM LOWER LEVEL; NIFTY CLOSES AT 2-MONTH LOW

EQUITIES, OIL REBOUND FROM LOWER LEVEL; NIFTY CLOSES AT 2-MONTH LOW

WORLD MARKETS

US indices, after opening down by 1%-1.5%, recovered through the session with Dow closing just 0.2% lower while Nasdaq and S & P 500 ended marginally in the green as worries about global growth were offset by mostly better-than-expected U.S. earnings and economic reports.

Claims for jobless benefits dropped to a 14-year low last week, falling by 23,000 to 264,000. Industrial production rose 1% in September, versus expectations of 0.4%. On the flip side, confidence among home builders fell in October after rising to a nine-year high the prior month.

St. Louis Fed President James Bullard said that the Federal Reserve should consider postponing the end of its bond purchase program to stop the drop in inflation expectations.

European markets too recovered quite a bit from intraday lows to end with cuts ranging from 0.2%-1.7%. DAX managed to break into green, up 0.1%. The European Commission moved to ease concerns over Greece by saying it would continue to assist Greece in whatever way was necessary and would ensure a smooth evolution of support for the country after its bailout program finishes.

Nymex crude, after dropping to as low as $79.8 a barrel, rebounded sharply to $82.7, up 1.1% from previous close. Gold fell 0.3% to $1241 an ounce.

AT HOME

After a rangebound trading in the morning trade, benchmark indices saw a sharp fall in the noon tracking weakness in European markets and ended with deep cuts of nearly a percent and half to close at their lowest level in 2 months. Sensex nosedived 350 points to settle at 25999 while Nifty finished at 7748, down 116 points. BSE mid-cap and small-cap indices lost 2.4% and 2.7% respectively. All the BSE sectoral indices ended in red with Consumer Durable and Power indices leading the tally, giving away 4.2% and 2.9% respectively.

FIIs net sold stocks and index futures worth Rs 1128 cr and 725 cr respectively but net bought stock futures worth Rs 363 cr. DIIs were net buyers to the tune of Rs 664 cr.

Rupee plunged 42 paise to close at 61.85/$, a seven-month low.

TCS missed street estimates by small margin. 6.4% q-o-q Dollar revenues rose 6.4% q-o-q to $3929 mn. In rupee terms consolidated revenues rose 7.7% to Rs 23816 cr while net profit was up 4.55% at Rs 5288 cr. EBIDTA margin stood at 26.85%, up 55 bps q-o-q.

Hero Motocorp reported better than expected 58.5% rise in September quarter net profit at Rs 763 cr. Revenues at Rs 6915 cr grew 20.8%, which was slightly below estimate. EBIDTA margin declined by 100 bps to 13.5%, slightly below 13.6% estimate.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes. SGX Nifty is suggesting about 30 points higher opening for our market.

Just to remind our viewers, we have been bearish on Nifty ever since it closed below 7925 on 25th September, confirming a lower-top lower-bottom formation on the daily chart. Since then we have been maintaining that unless we see a resumption of the higher-top higher-bottom formation, the near term view will not turn bullish.

Immediate previous top on the daily chart now stands at 7928, which needs to be crossed for fulfilling above condition.

On the way down, having broken below the 7785 support, the benchmark has open up the possibility of the retest of the 7540 bottom, from where the rally till 8180 had begun. Before that 7650 would be the immediate support to eye.

HCL Tech and Axis Bank will report their quarterly earnings today.