NIFTY RETREATS FROM ANTICIPATED RESISTANCE; 8200-8170 IS THE SUPPORT AREA

NIFTY RETREATS FROM ANTICIPATED RESISTANCE; 8200-8170 IS THE SUPPORT AREA

WORLD MARKETS

US indices ended mixed with the Dow and S & P 500 gaining 0.4% and 0.2% respectively, closing at record high, while Nasdaq lost 0.3% as biotech shares fell. Dow closed above 18000 for the first time.

Markets cheered data showing the U.S. economy expanded in the third quarter by 5%, the most in 11 years. Other data had orders for durable goods unexpectedly dropping in November, consumer sentiment coming at 93.6 in December versus a 93.5 estimate and the sale of new single-family homes falling for a second month in November.

Dollar index hit 90 for the first time in nine years. Nymex oil rose $1.86 or 3.4% to $57.12 a barrel; Brent crude rose $1.58 to $61.69 a barrel.

European markets gained between 0.3%-1.5%. French stocks outperformed after France's final third-quarter figure for GDP came in unchanged at 0.4% y-o-y. Spanish index gained a percent after the Bank of Spain raised its economic growth forecast for the country in 2014.

AT HOME

After rising nearly half a percent in the initial trade, benchmark indices plunged more than a percent from the top of the day to end lower by seven tenth of a percent, breaking three-day winning streak. Sensex lost 195 points to settle at 27506 while Nifty finished at 8267, down 57 points. BSE mid-cap and small-cap indices lost 0.3% and 0.6% respectively. Except a 0.1% rise in BSE FMCG index, all other sectoral indices ended in red with Metal and Capital Goods indices leading the tally, giving away 1.9% and 1.5% respectively. 

FIIs net sold stocks and stock futures worth Rs 445 cr and 136 cr respectively but net bought index futures worth Rs 1418 cr. DIIs were net buyers to the tune of Rs 516 cr.

Rupee depreciated 4 paise to end at 63.28/$.

The Winter session of Parliament came to a close yesterday. after passing a number of legislations but some key reform bills, including those on insurance and coal block allocations, remained pending.

The results for Jammu & Kashmir and Jharkhand assembly polls came out yesterday.  PDP got 28 seats in Jammu & Kashmir with the BJP coming second with its highest ever 25 seats in the states, but both falling short of simple majority in the 87 seat assembly.

Jharkhand, a state that was formed 14 years ago, got its first stable government with the BJP led alliance winning 42 seats, one more than the required majority of 41.

OUTLOOK

Today morning Nikkei is up more than a percent on the back of weakness in Yen. Shanghai is down more than a percent on the other hand. Other Asian markets are trading with gains of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

Ever since Nifty crossed the 38.2% retracement level of the 8627-7961 placed at 8216, we had given upside targets of 8294 and 8373 and had advised booking profit in long positions as the 8373 approaches as that is the 61.8% retracement level of the 8627-7961 fall and roughly coincides with the 34 DMA resistance.

The benchmark, after touching a high of 8365, plunged to 8267, nearly achieving the upside target and also vindicated our profit booking stance.

8373 continues to be important resistance to cross, only above which we would say that the recent pullback has the potential to turn the near term trend positive.

8200-8170 is the immediate support area on the hourly chart, a breach of which can take Nifty back to the 7961 bottom.

Indian markets will remain shut tomorrow on account of Christmas.