NIFTY RETREATS FROM 8185 HURDLE; RBI IN FOCUS

NIFTY RETREATS FROM 8185 HURDLE; RBI IN FOCUS

WORLD MARKETS                             

US indices gained 0.2%-0.4% yesterday with the Dow at fresh record closing high.

US crude fell 1.7% to $50.93 and Brent slid 1.8% to $53.93 after data showed record output levels from the OPEC countries.

US third-quarter productivity rose at an annualized rate of 3.1% while the U.S. trade deficit widened to $42.6 billion. October factory orders rose 2.7%, slightly above a 2.6% estimate.

U.S. Treasurys traded mixed, with the benchmark 10-year note slipping to 2.3915%, while the two-year note yield rose to 1.116%. The dollar index advanced 0.42%. Gold fell $6 to $1170 per ounce.

While main European markets added 0.5%-1.3%, Italy soared 4.2%. Italian Prime Minister Matteo Renzi agreed to delay his resignation until the country's 2017 budget is approved, easing the risks of early snap elections following the government's defeat in a referendum.

AT HOME

After rising more than half a percent, benchmark indices gave away most of the gains in last hour tumble to end just modestly higher. Sensex settled at 26393, up 44 points while Nifty added 14 points to finish at 7143. BSE mid-cap and small-cap indices gained 0.5% and 0.4% respectively. BSE Realty and Oil & Gas indices soared 1.7% and 1.2% respectively, becoming top gainers among the sectoral indices while FMCG and Consumer Durable indices lost 0.8% and 0.7% respectively, becoming top losers.

FIIs net bought stocks and index futures worth Rs 162 cr and 216 cr respectively but net sold stock futures worth Rs 91 cr. DIIs were net sellers to the tune of Rs 165 cr.

Rupee appreciated 31 paise to end at 67.90/$.

OUTLOOK

Today morning Asian markets are trading with gains of upto 0.7% and SGX Nifty is suggesting about 15 points higher start for our market.

In yesterday's report we had mentioned that 8160-8185, the gap created by the gap down opening on Friday, is the immediate resistance area to eye, a crossover of which is required to generate a "Buy" on the hourly chart.

The benchmark, after touching a high of 8179, reversed to end at 8143.

8185 continues to be immediate resistance, upon sustained trading above which 8250, the top made on Thursday, 1st December, would be the next hurdle to eye.

8040, the 61.8% retracement level of the recent 7916-8251 pullback, is the immediate support, below which 7916 would be the major support to eye.

Traders are advised to keep 8185 as the stop-loss for short positions.

RBI, at the end of its two-day monetary policy review, is widely expected to cut repo rate by 25 bps at the least. There are some expectations of a 50 bps cut to cushion the economy from the blow of demotisation.  A partial roll back of 100% CRR hike is also expected. The apex bank is expected to cut FY17 GDP growth forecast to 7%-7.5% from the earlier 7.6%. Inflation forecast for March 2017 is expected to be maintained at 5% with a downward bias.