Markets likely to remain rangebound; Shanghai Composite up 2%

Markets are likely to take a breather today after witnessing a steep fall yesterday with Indices hitting 52-week low in an intra-day trade.

The early indicator SGX Nifty has inched up by 5 points at 7,577.

On Thursday, markets lost ground for the fourth straight session to end at their lowest closing level in four months, amid a sell-off in global stocks, after further depreciation of the Chinese yuan rekindled fears of a growth slowdown in the world's second largest economy while slump in crude oil prices also dampened sentiment.

"Traders eyes will now be on the next crucial level of 7540 which is the 52 week lows and any close below the same can easily open downsides further towards 7320 in quick time. 7720 is now expected to be a strong resistance and on any pullback, the index is likely to meet strong supply as it moves towards the level," says Siddhartha Khemka, Head – Research, Centrum Wealth.
 
He further adds, "Oscillator setup of the Nifty is in a clear sell mode with all three indicators now trending down. While RSI and Stochastic were already trending down, the MACD too has now completed a clear downtick and is suggesting a cautious near term trading environment. The same is also indicated by the Volatility index which has moved within 19-20 range in a quick time. The range is expected to be strong resistance range and in case of a breach can lead to further volatility in the equity indices".

Besides, global benchmark oil futures rallied more than 2 % on Friday, following Asian shares higher after Beijing deactivated a circuit breaker mechanism that was blamed for aggravating equity market crashes.

Meanwhile, foreign portfolio investors (FPIs) sold shares worth Rs 1051.74 crore on Thursday as per provisional data released by the stock exchanges.

GLOBAL MARKETS

Asian shares are on course to post their biggest weekly fall in more than four years as investors dumped risk assets on fears over China's economy and its turbulent financial markets.

China announced late on Thursday it suspended its new stock market circuit breaker introduced only on Monday as the system failed to reduce market volatility, with some market players even saying it backfired.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2%, extending this week's loss to 7.4%, which would be its biggest fall since September 2011.

Japan's Nikkei, which is in its worst start of year in 20 years, fell 1% to a three-month low and is likely to post its biggest weekly fall since March 2011.

China's major stock indices rose more than 2% in early trade today after Beijing deactivated a circuit breaker mechanism blamed for aggravating market crashes this week.

The CSI300 index rose 2.4% to 3,371.87 points by 0127 GMT, while the Shanghai Composite Index gained 2.2% to 3,194.63 points.

CORPORATE NEWS

Prime Minister Narendra Modi would dedicate the 15 million tonne oil refinery built by Indian Oil Corporation (IOCL) at Paradeep to the nation on February 6.

Cipla has set up a six-member management council led by its chief executive officer Subhanu Saxena to drive growth.

Mahindra & Mahindra (M&M) is contemplating closing the current fiscal with the launch of two more passenger cars/utility vehicles, thereby completing the planned launch of 10 vehicles during the year, according to its senior vice-president (sales and customer care, automotive sector) Veejay Ram Lakra.

Bajaj Auto will launch series of new products, double capacity at one of its plants and launch new a brand this year even as it targets to increase its domestic market share.

A section of public sector banks' employees will observe one-day strike across the country today to protest violation of bilateral settlement agreement by associate banks of State Bank of India (SBI).

Titan Company expects to take a hit of up to Rs 500 crore this fiscal due to government's move to lower the transaction threshold of quoting PAN to Rs 2 lakh from Rs 5 lakh earlier.

L&T Hydrocarbon Engineering (LTHE), a fully owned subsidiary of L&T, in consortium with McDermott has bagged an offshore contract from ONGC valued at Rs 2450 crore for the development of ONGC's Vashista and S1 deepwater fields situated off the East Coast of India.

HDFC announced that its wholly owned subsidiary HDFC Capital Advisors has been appointed as an investment manager for the HDFC Capital Affordable Real Estate Fund-1 (HCARE-1).

With Reuters input