NIFTY GRADUALLY MOVING TOWARDS 34-DMA; TRAIL STOP LOSS TO 7890

NIFTY GRADUALLY MOVING TOWARDS 34-DMA; TRAIL STOP LOSS TO 7890

WORLD MARKETS                             

US indices soared a percent on the first day of Christmas month, despite data showing a decline in manufacturing activity in the economy.

The ISM Manufacturing PMI for November came in at 48.6, in contraction territory and below the expected 50.5 read. The print was the worst since June 2009 and the first time the index fell below 50 in three years. Construction spending rose 1% for October, topping estimates of 0.6%. The U.S. Markit PMI for November was 52.8, above the flash read of 52.6 but below the final October print of 54.1.

Dollar index held below 100. Nymex oil rose 20 cents to $41.85 a barrel. Iron ore touched a new decade low of $42.27 a tonne.

European markets, except a 0.6% higher FTSE, lost upto a percent with DAX leading the tally. Eurozone jobless rate fell to 10.7% in October from 10.8% in September. The final read on euro zone manufacturing PMI for November was 52.8, up slightly from October's 52.3 print.

Earlier, China's official manufacturing purchasing managers index showed a slight decline in November to 49.6, marking a three-year low. The official services sector PMI rose to 53.6, indicating China is on track with a transition to a consumption-oriented economy.

AT HOME

It was yet another rangebound but choppy session after which benchmark indices ended modestly higher. Sensex rose 24 points to settle at 26169 while Nifty finished at 7955, up 20 points. BSE mid-cap and small-cap indices however gained 0.8% and 0.5% respectively. BSE Metal and Basic Materials indices soared 3.2% and 1.5% respectively, becoming top gainers among the sectoral indices while Telecom and Auto indices were the top losers, down 1.1% and 0.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 107 cr, 323 cr and 204 cr respectively. DIIs were net buyers to the tune of Rs 195 cr.

Rupee appreciated 18 paise to end at 66.49/$.

The Reserve Bank of India kept its key lending rate unchanged on Tuesday, leaving the door open for more easing but making that dependent on meeting a challenging inflation target f‎or 2017. This had been widely expected, after consumer inflation picked up to a four-month high of 5% in October and as emerging markets brace for a hike in U.S. interest rates.

India's Nikkei manufacturing PMI fell to a 25-month low of 50.3 in November from 50.7 in October.

Maruti reported lower-than-expected 9.7% y-o-y growth in November sales at 1.208 lac units. Eicher Motor reported 48% growth in Royal Enfield sales at 40769 units, which again was below estimates. Ashok Leyland too missed estimate, reporting 16% growth at 8971 units. M & M sales rose 21% to 41590 units. Tata Motors reported 7% dip at 38918 units. Hero Motocorp sold 5.51 lac units, a marginal rise of 0.6%.  TVS reported 2.4% growth at 2.25 lac units..

OUTLOOK

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

We have been working with the target of 34-DMA ever since Nifty crossed immediate hurdle of 7860 on 20th November. The benchmark is gradually moving towards that. Yesterday it touched a high of 7972 before closing at 7955.

34-DMA has now moved lower to 8015 and continues to be upside target/hurdle to eye.

Immediate support on the hourly chart has moved up to 7890, which should serve as the stop loss in trading longs.