NIFTY ACHIEVES DOWNSIDE TARGET OF 34-DMA

NIFTY ACHIEVES DOWNSIDE TARGET OF 34-DMA

WORLD MARKETS

Dow and S & P 500 ended about 0.1% lower as concerns about oil prices and a worse-than-expected initial jobless claims figure weighed on sentiment. Nasdaq however gained 0.4% on the back of strength in technology stocks.

Nymex oil plunged 5.53% to $48.17 a barrel amid ample global supply and increasing U.S. commercial inventories. Brent fell $1.60 to $60 a barrel.

Initial claims for unemployment for the week of Feb. 15, as against the expected figure of 285000, came in at 313,000. The core CPI, the key figure for the Fed that excludes more volatile food and energy prices, gained 0.2% in January. However, the broader index was down more than expected at 0.7%. Durable goods orders figures for January increased a more-than-expected 2.8%, after a 3.4% decline in the prior month.

European markets gained between 0.6%-1.1%. The latest GDP data from Spain confirmed that the country grew 2% year-on-year in the last quarter. In the U.K., y-o-y GDP was confirmed at 2.7% and the German unemployment rate also stayed at a record low in February.

                                                             

AT HOME

After a flattish start, benchmark indices saw a sustained downward move through the session to end lower by nearly a percent on the expiry day of the February derivative series. Sensex tumbled 261 points to settle at 28747 while Nifty finished at 8684, down 83 points. BSE mid-cap and small-cap indices lost 0.8% each. Except a 0.3% and 0.04% rise in BSE Realty and Oil & Gas indices respectively, all other sectoral indices ended in red with IT and Auto indices leading the tally, giving away 1.4% each.

Railway minister Suresh Prabhu kept passenger fares unchanged and raised rates for carriage of some categories of freight in the 2015-16 railway budget that outlined plans for investment of Rs.8.5 trillion of investment in the network over the next five years. He raised the rail plan size for the next fiscal year by 52% to Rs.1.11 trillion. Prabhu set the target for the network to achieve an operating ratio of 88.5% in the fiscal year starting on 1 April compared with 91.8% in the current year. The budget raised the freight rates for urea by 10%, iron and steel by 0.8%, kerosene and cooking gas by 0.8%, coal by 6.3% and cement by 2.7%.

FIIs net bought stocks worth Rs 2312 cr but net sold index futures and stock futures worth Rs 871 cr and 803 cr respectively. DIIs were net buyers to the tune of Rs 341 cr.

Rupee appreciated 22 paise to end at 61.75/$.

The ratings agency S&P raised its India GDP growth forecast to 7.9% from 6.2% for the year ending March 2016 to reflect a recent change in how gross domestic product is calculated by the government, and said the economy should be a "bright spot" in Asia. The agency also raised its growth forecast for 2016/17 to 8.2% from 6.6% previously. At the same time, the ratings agency lowered growth forecasts for a slew of Asian countries, including China and Japan.

OUTLOOK

Today morning Asian markets are trading flat to modestly higher and SGX Nifty is suggesting about 30 points higher opening for our market.

Ever since Nifty broke immediate support of 8800 on Monday, we had been working with a downside target of about 8650 where 34-dma was placed. 34-DMA had since then moved up and was placed at 8670 yesterday. The benchmark touched a low of 8669 yesterday, achieving the downside target of 34-DMA and vindicating our view.

Traders would do well to book profit in short positions and wait for the breach of this important support before taking fresh shorts.

Immediate resistance on the hourly chart is placed around 8790 above which 8900, where the trendline adjoining recent tops is placed, would be the crucial hurdle to eye. A breach of 8900 would mark a breakout from a triangle formation and would project a big target of about 9400.

The Finance Ministry will release the Economic Survey today. The key figure to watch out would be the fiscal deficit target for FY16 and FY17. Currently markets are working with a target of 3.6% for FY16.