US EQUITIES REBOUND ALONG WITH OIL; NIFTY HOLDS 8235 SUPPORT

US EQUITIES REBOUND ALONG WITH OIL; NIFTY HOLDS 8235 SUPPORT

WORLD MARKETS

After falling sharply in the first half on the back of disappointing retail sales and worries over global economic growth, US indices recovered nearly a percent from the bottom of the day as crude reversed higher and finally ended lower by 0.5%-1%, extending the losing streak to fourth day.

Retail sales fell 0.9% in December, marking the highest fall in a year.

JPMorgan Chase dropped after reporting a decline in fourth-quarter profit; Wells Fargo also fell after the mortgage lender posted results in line with expectations.

Copper prices hit a five-year-plus low after the World Bank lowered its global growth forecasts for 2015 and 2016 due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices.

Nymex crude jumped 5.6% to $48.5 a barrel, posting its biggest one-day percentage gain in more than two years. Brent crude rose $2.10 to settle at $46.4 a barrel.

European markets, weighed down by energy and mining stocks, plunged 1.2%-2.4%.

The European Court of Justice yesterday said that the Outright Monetary Transactions (OMT) bond-buying program—commonly seen as a predecessor to QE—was compatible with treaty provisions and was in line with European Union law, as long as certain conditions were met. The ruling from the court is a non-binding judgment but has added weight to the possibility of more stimulus in the euro zone.

                                                             

AT HOME

After a positive start, benchmark indices plunged nearly a percent from the top of the day but recouped some of the losses in the noon trade to finally end lower by three tenth of a percent, extending the losing streak to second day. BSE Metal index nosedived 3.5%, becoming top loser among the sectoral indices, followed by a 0.9% cut in the Healthcare index. IT and Teck indices gained 1.1% and 0.8% respectively.

FIIs net sold stocks and stock futures worth Rs 70 cr and 244 cr respectively but net bought index futures worth Rs 178 cr. DIIs were net sellers to the tune of Rs 224 cr.

Rupee depreciated 4 paise to end at 62.18/$.

WPI for December rose marginally to 0.11% from zero in November but was below the expected 0.3% mark. Core WPI, or non-food manufacturing inflation, eased to 1.5%, an indication of subdued demand pressure. The inflation number for October was revised downwards to 1.66% from 1.77%.

OUTLOOK

Today morning, Nikkei is up nearly a percent and half, other Asian markets are trading with modest gains but SGX Nifty is suggesting about 20 points lower opening for our market.

Nifty continues to be in a broad consolidation after hitting a record high of 8627 in early December. The consolidation is taking a form of a triangle with the benchmark making lower tops and higher bottoms on the daily chart. 8446 and 8065, the top and bottom made last week, are the important resistance and support levels to eye from a larger perspective.

In yesterday's report we had mentioned that the immediate support on the hourly chart is placed at 8235 with the stop loss of which trading longs should be held on to. The benchmark, after touching a low of 8237, bounced back to end at 8278.

8235 continues to be immediate support a sustained trading below which would confirm a sell on the hourly chart and can take benchmark in the vicinity of the 8065, the lower level of the 8446-8065 range mentioned above. On the way up 8357, the top made on Tuesday, is the immediate resistance, above which 8446 would be the major hurdle to eye.

TCS and Bajaj Auto will report their quarterly earnings today.