Market open on a weak note as oil prices slide and global economy signal weak cues

After last week consolidation Nifty Future fell sharply amid weakness in Asian and European markets hitting its lowest closing level in almost six week, as market breadth indicating the overall health of the market was weak, leading sectors which drifted market on the down side were specifically IT, Metal and Infrastructure sector and also Indian rupee edged lower against the dollar on speculation an improving US economy will strengthen the dollar and damp demand for emerging-market assets.

In overseas markets, European stocks edged lower before the European Central Bank reveals take-up of its lending auction, which could provide clues on the central bank's policy decisions. US stocks suffered their worst declines in about two months in this week as a renewed slump in oil prices slammed energy companies while investors fretted that a stunning drop in oil prices signals a more worrisome global-economic slowdown.

Nifty December Future gave closing at 8276.90 with the weekly decline of 305.65 points.

In near term Nifty is likely to continue its correction as overall breadth of the market is negative and having resistance around the levels of 8380 on the upside while having immediate support around the level of 8200. Market may remain in negative zone on Monday as IIP seen negative growth at 4.2%, while CPI has seen a slight easing.

 

Upcoming Event:

    The government will release the inflation data based on wholesale price index (WPI) for November 2014 on Monday, 15th December 2014.

    All eyes will be on the outcome of the Federal Open Market Committee (FOMC) monetary policy review and snap election in Japan and Greece's presidential elections.

    Developments in ongoing winter session, movement of rupee against dollar, trend of investment by FII and global market can affect market movement in near term.

 

Stock Recommendations:

BUY KOTAK BANK IN NSE CASH ABOVE 1255 WITH SL OF 1235 TGT 1275,1295

Overall trend of the stock is bullish and is trading in range with positive bias from the last few trading sessions. It is trading above its 50 and 200 DMA , it may continue its uptrend with the crossing of the resistance level of 1255, traders can expect the target of 1275 and 1295 with the strict stop loss of 1235 in stock.

 

BUY GLENMARK IN NSE CASH ABOVE 843 WITH SL OF 794 TGT 892,932

Primary trend of the stock is bullish and now it is trading in range from the last few weeks, It is sustaining above its 50 and 200 DMA. The stock may continue major bullish trend with the crossing of the resistance level of 843, where long position can get accumulated for the targets of 892. Support of 794 should be placed at strict stop loss for the stock.

 

SELL ZEE FUT BELOW 362 WITH SL OF 370 TGT 354,350

The major trend of the stock is bullish, it is accumulating at the higher levels and is trading below 50 and 200 DMA. The stock may show correction if it breaches the support level of 362. One may sell the future below the level of 362 and keep the target of 354 with the strict stop loss of 370.

Commodity overview and outlook for this week 8th Dec - 14 Dec. 2014

Last week MCX GOLD future witnessed choppy movement in initial part of the week as India scrapped 80-20 rule in later part of the previous week which pressurized the Gold with -1.15 percent in initial part of the last week but it showed strong recovery with more than 2.5 percent gain on Monday. An unexpected step taken by India's Central Bank to ease curbs on overseas purchases instead of tightening them indicates that the government of India is more relaxed about the Current Account Deficit as lower crude oil and softer gold prices should keep the current account deficit in acceptable limits, even with some increase in the volume of gold imports. 

COMEX Gold headed its biggest daily gain in more than a year in initial part of the last week. It showed gain of more than 4.5 percent on Monday due to support from that surging oil market, increased potential in Indian Imports due to relaxation on 80-20 rule and technical buy signal. Switzerland's voting against the proposal of boosting gold Reserve from central bank also played an important role to create a bullish sentiments. Gold showed consolidated movement in later part of the week ahead of mixed economical events as better than expected ISM Manufacturing PMI, ISM Non-Manufacturing PMI, on-Farm Employment Change and ADP Non-Farm Employment Change, Trade Balance are the economical events which was lower than foretasted. SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings stood at 720.02 tonnes on Thursday remained unchanged from previous business day.

Silver tracked the trend of gold and witnessed bullish movement in initial part and consolidated movement in later part of the week. MCX Silver March contract consolidated in the range of 37500 -36700 in most part of the week but closed with more than 4 percent weekly gain. COMEX Silver could not sustain above the level of $16.00 in most part of the week.

Reserve Bank of India is in pace of easing restrictions of Gold imports, supply (imports) is likely to record healthy growth to meet increasing demand, as jewellers building up inventory to fuel growth and expansion plans. The relaxation of restrictions is expected to provide a fillip to the industry, which has been recording better than expected volumes. Improvement in availability of gold at low cost, gold metal loans and likely stabilization of gold prices at lower levels is expected to drive volume growth for jewellers over the medium term. India imported 102 tonnes of gold in the first half of November alone, and imports for this full year is expected in between 850 tonnes and 950 tonnes. All India Gems and Jewellery Federation (GJF) proposed unlocking of idle gold in households & trusts to reduce CAD and forming nodal ministry for representing the domestic gems & jewellery sector. GJF urge to the government to initiate the process of creating a comprehensive gold policy with the expectation of that gold supply will be better and job opportunities for craftsmen will also increase. GJF also requested to the Government to curb smuggling from neighboring countries by reducing gold import duties.

MCX Gold & Silver traded positive this week due to short covering in prices of COMEX Gold & Silver on weakening of U.S. dollar. Both Gold & Silver are consolidating on charts. MCX Gold is expected to rise and if MCX Gold sustain above 26500 and breaks the 26860 level then it can be expected to rise till the level of 27250. Similarly, MCX Silver is also looking  positive on charts and if it manages to sustain above 37400 and breach the level of 37900 on the upside, then it can rise till the level of 39400. 

For this week, major U.S. data Core Retail Sales, Retail Sales, Unemployment Claims, PPI and Prelim UoM Consumer Sentiment coupled with physical demand in Asian region will further provide direction to the bullion.

Equity Market watch for 8th December 2014

Market Overview:

Nifty Future after hitting all time high of 8668 last week saw some mild corrections and consolidating in a small range, but as overall breadth of the market is positive, broad based buying was seen across the board specifically led by Bank stocks edged higher on renewed buying as the Reserve Bank of India (RBI) Governor Raghuram Rajan after RBI's monetary policy review early this week indicated that monetary policy easing is likely early next year, including outside the policy review cycle, provided the current inflation momentum and changes in inflationary expectations continue and if fiscal developments are encouraging, Axis Bank, Yes Bank and heavyweight and cigarette major ITC scaled record highs and mid cap index made at all time high.

Nifty December Future gave closing at 8582.55 with the weekly marginal decline of 55.80 points.

In near term Nifty is likely to continue its uptrend with overall breadth of the market is positive and having resistance around the levels of 8750 on the upside having immediate support around the level of 8500.

Upcoming Events:

The government will unveil industrial production data for October 2014 on Friday, 12 December 2014. Industrial production growth improved to 2.5% in September 2014, from a revised 0.5% growth in August 2014.

Consumer Price Index based inflation (CPI) will be released on 12 December 2014.CPI for urban and rural India eased to 5.52% in October 2014, from 6.46% in September 2014.

WPI will be unveiled on 15 December next week. WPI eased to 1.77% in October from 2.38% in September 2014.

Movement of Rupee against Dollar, trend of the global market, further reforms and policy announcement in ongoing winter session, trend in FII flow may decide market trend in near term.

Stock Recommendation:

BUY SBI IN NSE CASH ABOVE 321.50 WITH SL OF 314 TGT 329,335

The overall trend of the stock is bullish and is likely to move upside further with the breakout of the consolidation at the levels of 321.50. As the stock is trading above its 50 and 200 DMA it is likely to continue its bullish trend and One can expect the targets of 329 and 335 with the stop loss of 314.

 

BUY TORNTPOWER IN NSE CASH ABOVE 167.50 WITH SL OF 161.50 TGT 173.50,177

After showing recovery from the lower levels on daily charts , it is trading sideways. It is sustaining below the level of 167.50 with the positive bias and is trading above its 50 and 200 DMA with the RSI of 59. It is likely to move upside with the crossing of the resistance level of 167.50 and one can get the targets of 173.50 and 177 with the stop loss of 161.50.

 

BUY COALINDIA IN NSE CASH ABOVE 360 WITH SL OF 354 TGT 366,370

After showing a good upside move from the lower levels, the stock is trading in correction phase in short term. It is sustaining below the resistance level of 360 with the positive bias and with the breakout of this levels is likely to show recovery in near term, One can initiate the long position in the stock above the level of 360 with the stop loss of 354 and can expect the targets of 366 and 370.

 

BUY HDFCBANK IN NSE CASH ABOVE 945 WITH SL OF 931 TGT 960,970

The overall trend of the stock is bullish and it is accumulating above the crucial support level of 931. It is likely to move upside with the crossing of the resistance level of 945 and may continue bull run as it is sustaining above its 50 DMA. Traders can get the targets of 960 in the stock with the strict stop loss of 931.

 

BUY COLPAL IN NSE CASH ABOVE 1940 WITH SL OF 1899 TGT 1985,2015

The stock is trading in range from the last few trading session and is sustaining above its 50 and 200 DMA after giving breakout of continuation pattern in short term. Traders can initiate the long position in the stock above the level of 1940 for the targets of 1985, support of 1899 will act as stop loss for the stock.

Weekly Outlook on Bullion Commodities

Commodity outlook on Bullion

Last week MCX Gold futures witnessed bearish movement last week and continued its bearish trend as India, the world's biggest user of gold eased regulations of 80:20 rule on imports to remove distortions in shipments and curb smuggling. According to 80:20 rule importers are required to sell 20 percent of their shipments to jewelers for re-export, the Reserve Bank of India said. Relaxation on Gold import will increase the supply within the country which will lead jewelers to improve stocks, lower procurement costs and help in illegal trade activities in metal. Gold imports in India, which accounted for 25 percent of the total global demand, plunged last year when the government imposed curbs to narrow a record current-account deficit and stop a slump in the rupee. According to All India Gems & Jewellery Trade Federation, the 20:80 rule was not helping the industry or the government. It was only increasing smuggling.

COMEX Gold headed biggest drop last week after showing three consecutive weekly advances as plunging oil prices could sap inflationary pressure which is reducing the metal's appeal as a hedge against inflation. Gold prices hurt and often seen as a hedge if oil prices drop along with strength in  the dollar. Gold is in pace of second straight annual loss which can be the longest slump in Gold price since 1998 as dollar strengthened and inflation failed to accelerate this year. Individuals filing for initial jobless benefit increased by 26,000 to 313,000 from estimates of 287,000, lower consumer confidence and decreased new home sales economical event brought gold slightly up gold in initial part of the week. Investor outflows resumed in SPDR Gold Trust, the world's largest Gold-backed exchange-traded fund, on Friday its holding remains at 717.63 tonnes, hitting a six-year low reflecting weak market sentiment. with PMI data from China Purchasing Managers' Index (PMI) slipped to 50.3 in November, a government study showed on Monday, lower than  forecast at 50.6. Not big enough to cause a damage, but still enough to take winds out of any upward push for Gold. with the World's biggest buyer economy in trouble.

Silver tracked the trend of gold and witnessed bearish movement in later part of the week. Silver prices consolidated in initial part of the week and witnessed biggest slump in three weeks due to dollar strength and OPEC minutes on Thursday. MCX Silver Dec contract sustained above major support level of 35500 but closed with weekly loss of 4.3% percent. COMEX Silver could not able to sustain above its major resistance of $16.60 and dropped from resistance levels.

Indian Institute of Management, Ahmadabad (IIMA) and the World Gold Council (WGC) announced the setting up of the ‘India Gold Policy Center', on Wednesday last week. The center is aimed towards conducting cutting-edge research on all aspects of the Indian gold industry. The objective of the ‘India Gold Policy Center’ is to develop insights into how the significant stocks of gold that India owns can be used to advance the economic growth, employment generation, social inclusion and the economic wealth of the nation. The Center aims to conduct research which can be used as practical applications that can be followed by industry and all stakeholders, which can play an important role to lead the development of an effective gold ecosystem in the country and development of gold industry globally. According to World Gold Council, “It is estimated that India holds around 22,000 tonnes of gold valued at over a trillion US dollars. This historic asset can be used to enhance the nation’s prosperity by putting it to work for the economy, creating jobs, developing skills, generating exports and revenues. To develop gold’s potential, we need to understand gold’s role in the Indian economy, through high quality data, insights and research.”

MCX Gold & Silver traded bearish due to drop in prices of COMEX Gold & Silver on positive sentiments about U.S. economy. Both Gold & Silver are still looking bearish on charts. MCX Gold is expected to fall and if MCX Gold sustain below 26000 and breaks the 25700 level then it can be expected to fall till the level of 25100. Similarly, MCX Silver is also looking week on charts and if it manages to sustain below 35300 and breach the level of 34300 on the downside, then it can fall till the level of 33000.

For this week, major U.S. data ISM Manufacturing PMI, ADP Non-Farm Employment Change, Unemployment Claims, Trade Balance coupled with physical demand in Asian region will further provide direction to the bullion.

Market eyes on RBI Policy to be declared tomorrow starts on a flat note 

Market Overview:

Last week After a marginal gain in early part of the week, Nifty Future saw some mild correction but recovered and gave flat expiry and on the last day of the week it extended gains by hitting all time high of 8668 as bulls had complete control over the bears, getting help from factors like Organization of Petroleum Exporting Countries (OPEC) refrained from reducing output which led to sharp decline in global crude oil prices which will help India in containing its fiscal deficit, current account deficit, reduce the government's fuel subsidy burden and fuel price inflation. Broad based buying was seen across the board specifically led by banking, auto and oil sector. The fuel prices has been lowered with Petrol prices cut by 91 paise, diesel by 84 paise on Sunday. This should help the economy and aviation Industry but will hurt the OMC (Oil Marketing Company) stocks sentiments

Nifty December Future hitting fresh highs gave closing at 8638.35 with the weekly gain of 145.95 points.Market may open on positive note on Monday as a result of better then expected GDP numbers at 5.3% for the second quarter.In near term Nifty is likely to continue its uptrend with overall breadth of the market is positive. Support for the Nifty Future will be at 8500,8300 while resistance is at 8750.

The RBI could be expected to consider lowering rates with Price of oil dropping, and economy having a subdued performance Gross domestic product expanded 5.3 percent in the July-September quarter from a year earlier, as a manufacturing sector brought the market down. Growth in the previous quarter was at a 2-1/2 year high of 5.7 percent.

Upcoming Events:

·         Shares of automobile will remain in focus ahead of monthly sales numbers.

·         Market movement will depend upon interest rate decision by Reserve Bank of India in its bimonthly monetary policy review and further policy announcement in winter session of parliament.

·         Oil stocks should be watched on likely revision of fuel prices

 

Stock Recommendations:

BUY SUNTV IN NSE CASH ABOVE 330 WITH SL OF 315 TGT 345,355

Overall trend of the stock is weak, it is accumulating at the lower levels and is sutaining below the falling trend line. It is likely to show recovery with the breakout of the trend line at the level of 330. Further the stock is trading with the RSI of 49, in near term buying opportunities can be seen in it. One may take long position in the stock above the level of 330 with the stop loss of 315, where longs can be covered at the levels of 345.

 

BUY SYNDICATE BANK IN NSE CASH ABOVE 133.70 WITH SL OF 123.70 TGT 143.70,150

The stock is forming a reversal pattern on daily charts after showing correction from the higher levels. It is sustaining above its 50 and 200 DMA with the RSI of 60, and is trading below the crucial resistance level of 133.70, it is likely to continue its major bull run above the level of 133.70, where traders can take long position in the stock for the targets of 143.70. Nearest support level of 123.70 can be placed as stop loss for the stock.

 

BUY GRASIM IN NSE CASH ABOVE 3600 WITH SL OF 3520 TGT 3680,3750

The primary trend of the stock is bullish and is trading sideways on daily charts. Presently the stock is trading below the falling trend line and above its 50 and 200 DMA. In near term, it is likely to move upside with the breakout of the trend line at the resistance level of 3600, one can expect the target os 3680 in the stock with the stop loss of 3620.

 

BUY AXIS BANK IN NSE CASH ABOVE 485.90 WITH THE SL 461 OF TGTS 511, 525

The primary trend of the stock is bullish , stock is accumulating at the higher levels and sustaining below the major resistance mark of 485.90. It is trading above 50 and 200 DMA with the RSI of 61.One can can expect further buying the stock if it breaks its major resistance. Traders can get 511 and 525 in near term. Technical stop loss for the stock is at 461.

 

BUY TITAN IN NSE CASH ABOVE 375 WITH THE SL 360 OF TGTS 390, 400

After showing correction from the higher levels stock has formed reversal candle stick pattern on the daily charts. Currently it is trading sideways and sustaining below the falling trend line on the short term charts. Breakout of its tread line resistance mark at 375 may show fresh buying in the stock and lead its bullish rally in upcoming sessions. Traders can get targets of 390 and 400 while stop loss can be placed at 360.