NIFTY RETREATS FROM 8300 AS EXPECTED; CPI, IIP IN FOCUS

NIFTY RETREATS FROM 8300 AS EXPECTED; CPI, IIP IN FOCUS

WORLD MARKETS                             

US indices lost between 0.7%-1% on Friday after December nonfarm payrolls report gave a mixed view of the economy.

The report showed an addition of 252000 jobs after generating an unexpectedly strong 353000 jobs in November. The unemployment rate dropped to 5.6%. What spooked the market was a decline in hourly earnings which fell by 5 cents an hour.

Dollar index slipped to 91.846, off a nine-year peak of 92.528 scaled last week. Nymex oil fell 43 cents to $48.36 a barrel while Brent dropped 85 cents to $50.11.

European markets plunged between 1%-4% with Spain and Italy leading the tally. Apart from weakness in US equities, shares were also weighed down by massacre at the office of satirical magazine "Charlie Hebdo" in Paris.

For the week, US indices lost about half a percent.  In Europe, Spain and Italy plunged 6% and 5% respectively while FTSE, CAC and DAX were down between 0.7%-1.7%.

AT HOME

After a gap up opening, benchmark indices plunged nearly a percent and third from the top of the day, but recouped most of the losses in the noon trade to end higher by about six tenth of a percent. Sensex gained 184 points to settle at 27458 while finished at 8285, up 50 points. BSE mid-cap and small-cap indices gained 0.1% each. BSE IT and Tech indices climbed 3.5% and 2.5% respectively, becoming top gainers among the sectoral indices while Power and Capital Goods indices lost 0.9% and 0.4% respectively.

FIIs net sold stocks and index futures worth Rs 298 cr and 62 cr respectively but net bought stock futures worth Rs 574 cr. DIIs were net buyers to the tune of Rs 300 cr.

Rupee appreciated 35 paise to end at 4-week high at 62.32/$.

Infosys earnings beat street estimates with net profit rising 5% sequentially to Rs 3250 cr and revenues increasing 3.4% to Rs 13796 cr. Dollar revenues rose 0.8% to USD 2.218 bn. The company maintained its FY15 dollar revenue growth guidance of 7-9%, ending speculation that it would lower forecast. The company's volumes grew 4.2% q-o-q, the highest in 3 years.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points lower opening for our market.

In Friday's report we had mentioned that 8300, the 61.8% retracement level of the recent 8446-8065 fall, would be the important immediate hurdle to eye and had therefore advised booking profits in trading longs around 8300.

The benchmark after touching a high of 8303 in the initial trade, plunged all the way to 8190, before recovering to end at 8284.

8300 continues to be the immediate hurdle a crossover of which would generate a buy on the hourly chart and would pave the way for the further upside till about 8446, the top made last week. On the way down 8190, the bottom made on Friday, would be the immediate support.

Traders are advised to wait for the crossover of 8300 for taking fresh longs.

India's Consumer price index for December would be released today and is expected to show retail inflation accelerated to 5.2% from 4.4% in November. Core CPI is expected at 5.3%. Industrial output and trade data for November would also be released today. IIP is estimated to show a growth of 2.2% as against a contraction of 4.2% in the previous month.