NIFTY RETREATS AFTER NEARLY ACHIEVING 7605-7620 TARGET

NIFTY RETREATS AFTER NEARLY ACHIEVING 7605-7620 TARGET

WORLD MARKETS                             

After falling nearly a percent in the initial trade on account of declines in oil prices and soft China manufacturing data, US indices recouped most of the losses through the session to end narrowly mixed.

Energy sector was the greatest laggard as Nymex oil fell $2 or 6% to $31.62 a barrel for its worst daily loss since September 1 on weak economic data from China and news that an OPEC source played down talk of an emergency meeting. Brent fell $1.8 or 5% to $34.20 a barrel.

China's official manufacturing PMI for January fell to 49.4, the weakest read since August 2012 and marking a six-straight month of contraction. The official non-manufacturing PMI fell to 53.5 in January from 54.4 the prior month. The Caixin manufacturing PMI also remained in contraction territory but edged up to 48.4. Shanghai Composite ended down 1.8%.

Back in the US, ISM manufacturing index for January came in at 48.2, marking the fourth-straight month of contraction. Markit's U.S. Manufacturing PMI for January came in at 52.4, a touch below the flash read but above December's final 51.2 print. Personal income for December showed a 0.3% increase. Consumer spending was unchanged for the month, while November spending was revised higher to 0.5%.Construction spending rose 0.1% in December.

European markets lost 0.3%-0.9% with Italy leading the losses. European Central Bank President Mario Draghi reiterated in a speech the central bank will review and reconsider its policy stance in March.

Gold rose $12 to $1128 an ounce.

AT HOME

After gaining nearly half a percent in first hour of trade, benchmark indices saw a sustained downward move through rest of the session and finally ended modestly lower. Sensex lost 46 points to settle at 24825 while Nifty finished at 7556, down 7 points. BSE mid-cap and small-cap indices however gained 0.6% and 0.3% respectively.  BSE Bankex tumbled 1.4%, becoming top loser among the sectoral indices, followed by 0.8% cut in Finance index. Telecom index climbed 1.9%, becoming top gainer, followed by 1% uptick in FMCG index.

FIIs net bought stocks, index futures and stock futures worth Rs 254 cr, 365 cr and 260 cr respectively. DIIs were net sellers to the tune of Rs 536 cr.

Rupee depreciated 6 paise to end at 67.84/$.

India's January manufacturing PMI came in at a four-month high of 51.1, up from 49.1 in December.

India's core sector, comprising of eight core industries, grew at 0.9% in December compared to a decline of 1.3% in November.

Maruti reported disappointed the street with 2.6% y-o-y fall in January sales at 1.16 lac units. Eicher Motors reported 65% jump in Royal Enfield sales at 47710 units while commercial vehicles sales rose by 13.6% to 3768 units. Ashok Leyland sold 13886 units, a growth of 30% y-o-y. M & M's sales growth stood at 10% with 43789 units. TVS Motor reported 12.1% growth at 2.05 lac units. Hero MotoCorp disappointed with just 0.8% growth at 5.63 lac units. Tata Motors reported 10% rise at 47034 units.

Tech Mahindra reported in-line with estimated 3.4% fall in consolidated net profit at Rs 759 cr. Revenue increased 1.3% to Rs 6701 cr. Dollar revenue rose at lesser-than-expected 0.4% to USD 1015 mn and 1.2% in constant currency. EBIT rose 6.5% to Rs 962 cr and margin expanded by 71 bps to 14.36%, which were largely in-line.

OUTLOOK

Today morning, except half a percent higher Shanghai, other Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a flattish start for our market.

At the risk of repeating, we had been working with target range of 7605-7620 ever since Nifty took out immediate hurdle of 7440 on 25th January. The benchmark touched a high of 7600 yesterday, nearly achieving the target mentioned above, and slipped from there to end at 7556.

7605-7620, followed by 34-DMA around 7650, continue to be important resistance points on the way up after a decent run-up from the bottom of 7240 made in December.

Meanwhile, immediate support on the hourly chart has moved up to 7460, with the stop loss of which remaining trading longs can be held on to.RBI, in it's monetary policy review, is expected to leave key rates unchanged. The word "accommodative" is however is expected to be retained. Markets would also watch out for governor Rajan's comments on inflation, GDP growth, fiscal deficit, liquidity and global environment to guage the tone of the policy.

DLF and Compton Greaves will report their quarterly results today.