NIFTY ON TRACK TO ACHIEVE 7480 TARGET; TRAIL STOP LOSS TO 7655

NIFTY ON TRACK TO ACHIEVE 7480 TARGET; TRAIL STOP LOSS TO 7655

WORLD MARKETS                             

US indices plunged 1%-1.5% yesterday with financials leading declines. Continued strength in the yen against the dollar renewed concerns about global growth and the effectiveness of central bank policy.

Yen touched 107.7, the highest level against the US dollar since October 2014 before recovering to 108.4.

Nymex oil broke two-day win streak to settle 49 cents or 1.3% lower at $37.26 a barrel. Gold rose $14 to $1237 an ounce.

Weekly jobless claims came in at 267,000 vs estimate of 270000.

Treasury yields fell, following renewed declines in the German 10-year bund yield. The 2-year yield touched a low of 0.692%, its lowest since Feb. 24, while the 10-year yield touched 1.685%, its lowest since Feb. 25.

European markets fell between 0.4%-2.4% with Italy leading the losses.

AT HOME

Benchmark indices tumbled nine tenth of a percent in today's trade to close at the lowest level since 17th March. Sensex slumped 215 points to settle at 24685 while Nifty ended at 7546, down 68 points. BSE mid-cap and small-cap indices lost 0.4% each. BSE Consumer Durable and IT indices fell 2% and 1.2% respectively, becoming top losers among the sectoral indices while Energy and Healthcare indices were the top gainers, up 0.6% each.

FIIs net sold stocks and index futures worth Rs 295 cr and 1474 cr respectively but net bought stock futures worth Rs 125 cr. DIIs were net sellers to the tune of Rs 16 cr.

Rupee appreciated 18 paise to end at 66.47/$.

Tata Power plunged after reports said that the Appellate Tribunal for Electricity has denied compensatory tariff for the Indonesian coal-based power plants of Tata Power and Adani Power and has also adjudicated that the Central Electricity Regulatory Commission cannot levy compensatory tariff.

On the flip side, BHEL climbed after provisional results indicated that the company is likely to post net profit of around Rs 400 cr in January-March quarter after reporting a net loss in previous two quarters.  Turnover declined 13.7% to Rs 26,700 crore in FY16 against Rs 30,947 crore in earlier year. However, order inflows increased by 42% to Rs 43,727 crore from Rs 30,814 crore in same period.

OUTLOOK

Today morning Asian markets are trading with cuts of 0.7%-1.1% with Nikkei leading on the way down and SGX Nifty is suggesting a flattish start for our market.

After sounding cautious near the important 34-week moving average hurdle, we had advised going short once the benchmark sustains below 7666, which was the immediate previous bottom on the hourly chart. We were working with the initial downside target of 7582, which was the bottom made last week below which we had said that the next support will come around 7480.

The benchmark after breaking 7666 support on Tuesday has been under pressure and yesterday plunged to 7546, moving towards 7480 target and vindicating our view.

7480 continues to be the downside target to eye. Immediate resistance on the hourly chart has moved lower to 7655, with the stop loss of which short positions should be held on to.