EQUITIES EXTEND FALL; OIL CONTINUES TO CLIMB

EQUITIES EXTEND FALL; OIL CONTINUES TO CLIMB

WORLD MARKETS                             

US indices fell 0.7%-1.1% yesterday on nagging concerns about slowing growth in China and U.S. monetary policy.

Oil continued to surge, rising 8.8% at $49.20 a barrel, more than wiping out August losses of nearly 20 percent and posting its best three-day rally since the three days ending Aug. 6, 1990. The gains came on news the Organization of Petroleum Exporting Countries noted concerns about low oil prices in its publication issued Monday. Brent crude jumped 6.5% to $53.70 a barrel.

The Chicago purchasing managers' index (PMI) for August came in at 54.4, slightly below expectations and last month's read, but still indicating expansion.

Earlier, Shanghai Composite fell more than 3% in intraday trading on a report in the Financial Times that Beijing had ended the large-scale share purchase program that it was using to support the market. Still, the Shanghai Composite pared most of its falls to end the day down 0.8%.

European markets fell 0.2%-0.9%

For the month of August, US indices fell more than 6%, their worst month in three years.

AT HOME

After falling two third of a percent in the initial trade, benchmark indices rebounded more than a percent , but gave away most of recovery in the noon trade to end lower by four tenth of a percent. Sensex settled at 26283, down 109 points while Nifty lost 31 points to finish at 7971. BSE mid-cap and small-cap indices lost 0.2% each. BSE Healthcare index soared 1.8%, becoming top gainer among the sectoral indices, followed by 0.6% rise in Metal index. Power and Realty indices were the top losers, down 1.5% and 1.3% respectively.

FIIs net sold stocks worth Rs 551 cr but net bought index futures and stock futures worth Rs 539 cr and 659 cr respectively. DIIs were net buyers to the tune of Rs 479 cr.

Rupee depreciated 34 paise to end at 66.48/$.

India's first quarter GDP grew at 7%, down from 7.5% in the January-March quarter.  Another measure—gross value added (GVA) at basic prices—showed that economic growth accelerated to 7.1% in April-June against 6.1% in January-March.

India's core sector, comprising of eight key industries, grew by 1.1% in July, decelerating from 3% growth registered in the previous month.

FIIs net sold stocks worth . DIIs were net buyers to the tune of Rs 479 cr.

Oil marketing companies cut petrol price by Rs 2/ltr and diesel prices by 50 paise per litre.

HDFC Bank cut the base rate by 35 bps to 9.35%.

OUTLOOK

China's official manufacturing PMI for August has come in at 49.7, down from 50 in July.

Shanghai Composite and Nikkei are trading with cuts of more than 2%, other Asian markets are trading with modest cuts and SGX Nifty is suggesting about 70 points lower opening for our market.

For last two sessions we have been advising holding on to trading longs with the stop loss of 7910, which is the immediate support on the hourly chart.

After today's gap down opening, Nifty will be closer to that level. A sustained trading below 7910 would generate a sell on the hourly chart and would open up the space for the further downside till about 7830, which is the 61.8% retracement level of the recent 7667-8092 upmove.

Traders are advised to exit long position if Nifty breaks the low made in first hour.

Automobile companies will report their August sales numbers today.