NIFTY SET TO BREACH 7540 SUPPORT; TRAIL STOP LOSS TO 7700

NIFTY SET TO BREACH 7540 SUPPORT; TRAIL STOP LOSS TO 7700

WORLD MARKETS                             

US indices plunged 1% on Friday to end the year's first trading week with sharp losses as global economic concerns outweighed an above-expectation jobs number for December.

The last nonfarm payrolls report for 2015 showed creation of 292,000 jobs, much more than the expected 200,000 new jobs. The unemployment rate was 5%. Average hourly earnings declined one cent, for an annualized gain of 2.5%.

Nymex oil fell 11 cents or 0.33% to $33.16 a barrel on Friday and down more than 10% for the week.

European markets fell 0.7%-1.7%.

Earlier, Asian stocks closed mixed, with the Nikkei slightly lower but the Shanghai Composite up nearly 2%. The People's Bank of China said it would further liberalize interest rates and make the yuan more international and keep the currency basically stable, among other policy measures.

For the week, US indices plunged 6%-7.3%, posting their worst weekly fall since 2011. European markets nosedived 5.3%-8.3% with DAX leading on the way down. Asian markets lost 6.7%-10% with Shanghai at the top.

AT HOME

Benchmark indices managed to end higher by about four tenth of a percent after a rangebound but choppy trade on Friday, breaking the 4-day losing streak. Sensex settled at 24934, up 82 points while Nifty rose 33 points to finish at 7601. BSE mid-cap and small-cap indices gained 1.3% and 1.2% respectively. Tata Power and Tata Motors climbed 3% each, becoming top Nifty gainers whereas LT and Cipla were the top losers, down 2.4% and 2.1% respectively. Except a 0.7% and 0.1% cut in BSE Capital Goods and Metal indices respectively, all the sectoral indices ended in green with Realty and Utilities indices leading the tally, up 2.3% each.

FIIs net sold stocks, index futures and stock futures worth Rs 1237 cr, 356 cr and 367 cr respectively. DIIs were net buyers to the tune of Rs 1004 cr.

Rupee appreciated 30 paise to end at 66.63/$.

For the week, Sensex and Nifty nosedived 4.5% and 4.7% respectively, registering the worst weekly fall in more than four years and closing at the lowest level since the week ended 8th August 2014.

OUTLOOK

Today morning Asian markets have opened with cuts of 1%-2.5% and SGX Nifty is suggesting about 80 point lower opening for our market.

In Friday's report we had mentioned that 7550 and 7540 are the bottoms made in September and December respectively and continue to be important support levels to eye. We had also said that upon sustained trading below 7540, next major supports to eye would be the lower band of monthly bollinger placed around 7450 and the 34-month moving average placed around 7350.

The benchmark rose 33 points on Friday to close at 7601 but the gap down opening today would take it below 7540 mark. As mentioned above, upon sustained trading below 7540, next target to eye would be around 7450, which is the lower band of monthly bollinger. Below 7450, 7350, where the 34-month average is placed, would be the crucial support to eye.

Immediate hurdle on the hourly chart would have moved lower to around 7700 after today's gap down opening, which should serve as the new stop loss for trading shorts.