NIFTY REBOUNDS TO HOLD 34-DMA AND BREAK SEVEN DAY LOSING STREAK; 8650-8700 IS THE RESISTANCE AREA

NIFTY REBOUNDS TO HOLD 34-DMA AND BREAK SEVEN DAY LOSING STREAK; 8650-8700 IS THE RESISTANCE AREA

WORLD MARKETS

US indices climbed between 0.8%-1.3% on hopes of a resolution in the Greek debt negotiations, as well as better-than-expected revenues from Coca-Cola .

Despite Germany's stance that Greece needed to make a credible effort to recover itself with tighter public finances and economic reforms markets remained optimistic that a deal between Greece and the euro zone will be struck when the euro group of finance ministers meets in Brussels today where Greece's Finance Minister is expected to detail new reform proposals.

Boosting the sentiment was speculation that the European Commission could be ready to table a compromise on Greece's bailout program and propose a six-month extension to the country's bailout, which is due to end on February 28. The German Finance Minister later said the speculation was "wrong".

Back in the US, small business optimism fell 2.5 points to 97.9 in January amid worries over the near-term outlook. Wholesale inventories rose by lower-than-expected 0.1% in December.

The President of the Federal Reserve Bank of Richmond said that June 'looks like the attractive option' for raising rates.

Nymex crude tumbled $2.84 to $50.02 a barrel while Brent fell about $2 to $56, ending a three-day rally after the International Energy Agency (IEA) warned that oil prices may decline as oil stocks held by countries in the Organization for Economic Cooperation and Development continue to increase.

European markets, except a marginally lower FTSE, gained between 0.8%-1.8%. Greek stocks surged 8%.

Earlier, data out of China added to concerns of slowdown. China's consumer price index (CPI) rose 0.8% y-o-y in January, below a forecast for a 1%. The producer price index fell an annual 4.3%, worse than the 3.8% decline expected.

                                                             

AT HOME

After an extremely choppy trading session, benchmark indices managed to end higher by just under half a percent, breaking the seven day losing streak. Sensex settled at 28356, up 128 points while Nifty gained 39 points to finish at 8566. BSE mid-cap index gained 0.4% while the small-cap index ended lower by 0.1%. BSE Bankex and Auto index gained the most among the sectoral indices, rising 1.8% each while Oil & Gas and IT indices lost 0.9% and 0.7% respectively.

FIIs net sold stocks worth Rs 1261 cr but net bought index futures and stock futures worth Rs 403 cr and 80 cr respectively. DIIs were net buyers to the tune of Rs 851 cr.

Rupee depreciated 2 paise to end at 62.18/$.

In the Delhi assembly elections Aam Aadmi Party (AAP) decimated BJP and Congress by recording a landslide victory, securing 67 of the 70 seats.

OUTLOOK

Today morning, Asian markets are trading with modest gains and SGX Nifty is suggesting a flattish start for our market.

Just to reiterate, we have held negative bias on Nifty since 8850, the immediate support on the hourly chart was broken on 30th January. We had given an initial downside target of 8640, which was the 38.2% retracement level of the 8065-8997 upmove below which we had said that 8500, in the vicinity of which 34-DMA is placed, would be an important support to eye.

Yesterday, the benchmark, after touching a low of 8470 in the initial trade, finally ended at 8565, holding 34-DMA support on closing basis.

Traders are advised to book profits in short positions and initiate fresh ones if 8500 is breached on closing basis. On the way up, 8650-8700 is the immediate resistance zone, a crossover of which would generate a buy on the hourly chart and would pave the way for the further upside till about 8800, which is the 61.8% retracement level of the recent 8997-8470 fall.