EQUITIES EXTEND GAINS ON CENTRAL BANK SUPPORT HOPES; INFY, US JOBS REPORT IN FOCUS TODAY

EQUITIES EXTEND GAINS ON CENTRAL BANK SUPPORT HOPES; INFY, US JOBS REPORT IN FOCUS TODAY

WORLD MARKETS                             

US indices surged 1.8% each yesterday on speculation that central banks will support growth even as the American economy shows signs of strength.

Minutes of the latest Fed meeting released on Wednesday suggested that the Fed is unlikely to raise interest rates before late April. The minutes also showed some Fed officials are concerned about risks posed by overseas economies.

Fed Bank of Chicago President Charles Evans yesterday said he did not believe the central bank should be in a rush to hike interest rates.

Weekly jobless claims dropped by 4000 to 294000.

In a letter to European lawmakers, ECB President Mario Draghi said the ECB would reassess its monetary-policy stance early this year, and that ECB moves could include sovereign bond purchases.

Nymex oil rose 14 cents or 0.3% to $48.79 a barrel; Brent fell 26 cents to $51 a barrel.

European markets climbed between 2.3%-3.6% on Draghi's reiteration that the ECB was ready to start "full-blown" quantitative easing. A euro area business confidence index for December fell to 0.04 versus a reading of 0.17 in November. Also, German factory orders showed a sharp monthly fall in November, with new orders down 2.4%.

AT HOME

After three days of retreat, bulls were back with a vengeance as Nifty and Sensex soared 1.64% and 1.36% respectively in today's trade, with Nifty registering largest gain since 31st October 2014. Sensex gained 366 points to settle at 27275 while Nifty finished at 8235, up 132 points. BSE mid-cap and small-cap indices gained 1.8% each. All the BSE sectoral indices ended in green with Realty index and Bankex leading the tally, putting on 2.6% and 2.1% respectively.

FIIs net sold stocks and index futures worth Rs 467 cr and 177 cr respectively but net bought stock futures worth Rs 508 cr. DIIs were net buyers to the tune of Rs 289 cr.

Rupee appreciated 50 paise to end at 62.67/$, marking a 4-week high.

OUTLOOK

Today morning Asian markets are trading with gains of 0.5%-1% and SGX Nifty is suggesting about 50 points higher opening for our market.

In yesterday's report we had mentioned that after holding the 8050 support Nifty was set for a bounce back and that 8211, the 38.2% retracement level of the recent 8446-8065 fall, would be the first hurdle above which 8300, the 61.8% retracement level, would be the next resistance.

Nifty surged 132 points yesterday to end at 8235 and is set to open about 60 point higher today which would take it closer to 8300 mark. A sustained trading above 8300 would generate a buy on the hourly chart and would pave the way for the further upside till 8446, the top made on Monday.

Traders are advised to book some profits in trading longs around 8300 and can initiate fresh ones if the benchmark sustains above 8300.

Tech major Infosys will kick start the December quarter earnings season today. Dollar revenues are expected to grow 1% q-o-q to USD 2222 mn while rupee revenues may rise 3.3% to Rs 13783 cr. Net profit is expected at Rs 3157 cr, up 1.9%. EBIDTA margin is expected at 25.95% vs 26.1% in previous quarter. The company is expected to cut its FY15 dollar revenue growth guidance to 6-8% from 7-9% due to cross currency impact.

Also in focus would be US non-farm payroll report which is expected to show an addition of 240000 jobs in December. Unemployment rate is expected to dip to 5.7%.