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The Nifty fell like nine-pins on Tuesday as the benchmark could never recover from the morning gap down of 50 points. It closed with a loss of 251 points at 8127.

This is the 8th largest ever fall in Nifty in absolute terms and the largest since 6th July 2009.  The Sensex fell 856 points and recorded its 7th largest fall. 

The below table will give you a snapshot of the largest fall in the two benchmarks so far. 

TOP 10 ABS FALL IN NIFTY

Date	Abs Fall	%Fall
21 - Jan 08	-496.50	-8.70
24 - Oct 08	-359.15	-12.20
22 - Jan 08	-309.50	-5.94
17 - Dec 07	-270.70	-4.48
03 - Mar 08	-270.50	-5.18
11 - Feb 08	-263.35	-5.14
06 - Jul 09	-258.55	-5.84
06 - Jan 15	-251.05	-3.00
13 - Mar 08	-248.40	-5.10
18 - May 06	-246.20	-6.77

TOP 10 ABS FALL IN SENSEX

Date	Abs Fall	%Fall
21 - Jan 08	-1408.35	-7.41
24 - Oct 08	-1070.63	-10.96
17 - Mar 08	-951.03	-6.03
03 Mar 08	-900.84	-5.12
22 - Jan 08	-875.41	-4.97
06 - Jul 09	-869.65	-5.83
06 - Jan 15	-854.86	-3.07
11 - Feb 08	-833.98	-4.78
18 - May 06	-826.38	-6.76
10 - Oct 08	-800.51	-7.07

 
Where do we go from here?

Tuesday fall has wiped out all the hard work the Nifty had done in the past 12 sessions. This kind of a fall is usually an indicator of worst things to come.
The Nifty has now made a lower high. This is also bearish. This lower high was made on Monday at 8445.

So unless the Nifty closes above the 8450 mark, the markets will be said to be in a downward trend. Support exists in the 8050 area. This support emerges from the upward sloping trendline that is drawn by joining the intraday lows of 7723 and 7961 seen on 17/10/2014 and 17/12/2014 respectively.

A close below the 8050 level would indicate that the Nifty is headed southwards though some purists would like to see the earlier low of 7961 be breached. Further support for the Nifty could be at 7658 from its 200 DMA.

On the higher side, the Nifty will struggle in the 8327-8364 region, which is the gap.
 
Pharma stocks appear to be the best bet under the circumstances and the stocks that use the Crude derivatives as raw materials.

Fundamental worries

1.   Cascading Crude

The falling crude is cutting our trade deficit and helping us bridge the fiscal deficit. It is also improving the bottom-line of all the companies that use Crude derivatives as a raw material. But on the other hand, it is contracting the global economy.

Energy accounts for 14% of the world GDP. The tumbling crude is also taking coal and other energy derivatives with it. More than 55% fall in Brent Crude forms its June high would have halved the energy share in the world economy, making it just 7% as a back of the envelope calculation.

Should the crude tumble below the $45 mark, it could also seriously hit the U.S. economy, as shale gas could see closure of wells. 75% of the junk bonds issued in the U.S. have gone to fund the shale gas expansion. These could turn bad.

More importantly 90% of the jobs have been created are in those shale gas states. The entire recovery of the U.S. economy could be turned on its head if shale gas production comes to stand still

2.   Greece

Greece is a matter of worry because in three weeks they will go for elections and the Government which is expected to be formed is likely to have socialistic leanings.

Under the  Syriza government Greece will exit the bailout. They would like to remain in the EU but would want their debt to be cut by half. They want the same level of debt relief ? 50 per cent ? that Germany secured in 1953, which Greece signed up to despite the death of some 300,000 of its citizens under Nazi occupation.

As a result of this crisis, the head of the European Central Bank (ECB), Mario Draghi, is caught in a horrible bind. He is itching to kick off a trillion-euro blast of quantitative easing on January 22 to head off the deflationary forces that threaten to lock the Eurozone into a Japanese-style trap. This will require sovereign bond buying.

Yet the ECB cannot agree to buy Greek bonds three days before the likely election of a party that has vowed to repudiate that same debt. Nor can he exclude Greece?s bonds from the purchases, for to do so would be to pre-empt democracy.

Analysts who think Greece is peanuts, a small economy of less than $240 billion don?t know that cascading impact it could have on other economies such as Portugal, Spain and ultimately Italy, which will be difficult to manage.

Services PMI slips to 51.1 in December, Drags composite PMI lower

The HSBC Services Purchasing Managers Index (PMI) eased to 51.1 in December from Novembers five-month high of 52.6 on account of lower growth in new businesses. Despite December manufacturing PMI rising to the highest level in two years, the composite output of the private sector - both manufacturing and services slowed down to 52.9 in December from 53.6  in November.

Apollo Hospitals buys Nova Speciality in Rs 145 crore deal

Apollo Hospitals Enterprise Ltd, the country's top hospital firm, has acquired Nova Specialty Hospitals, the short-stay surgical centres unit of Nova Medical Centers Pvt Ltd, for around Rs 145 crore ($24 million). Under the transaction, Apollo Health and Lifestyle Limited (AHLL), a wholly owned subsidiary of Apollo Hospitals, is buying Nova Specialty Hospitals to create business of Rs 500 Cr in five years from short stay/day surgery centres.

Nova Specialty Hospitals is a chain of 11 short-stay surgery centres spread across eight cities. AHLL has close to 100 operational centres in India and Middle East. Apollo Health and Lifestyle Ltd (AHLL) are currently present in the secondary care segment through the Day Surgery and Cradle formats. Given the immense potential and the need for quality healthcare delivery closer to the home, this acquisition will enable AHLL to expand its footprint in new markets such as Mumbai, Jaipur and Kanpur. The combined network will clock turnover of Rs 115-125 crore for the year ending March 2015. However it is aiming to create a business of Rs 500 crore in 5 years in the space of multi-speciality short stay/day surgery centres.
 
Aurobindo Pharma, Lupin and Jubilant Life Sciences get USFDA nod for hypertension drug

Three domestic firms, Aurobindo Pharma, Lupin and Jubilant Life Sciences, have received final approval from US health regulator to sell generic copies of Valsartan tablets used for treatment of hypertension. The current annualised US market size for Valsartan tablets USP, 40 mg, 80 mg, 160 mg, and 320 mg as per IMS is around USD 2 billion.

While Lupin has launched the product in the US market already, Jubilant Life Sciences said it planned to launch the drug immediately. Aurobindo Pharma also said the product is ready for launch.

The tablets are indicated for treatment of hypertension and are the generic versions of Novartis Pharmaceuticals Corporation's Diovan tablets.

PNB re-calibrates  interest rate on FDs by up to 0.5%

State-owned Punjab National Bank (PNB) today revised interest rate on fixed deposits by up to 0.5% on various maturities.

For deposits less than Rs 1 crore having maturity between 7-14 days, the new interest rate will be 4.50% up from the existing 4%. Similarly, the bank has increased interest rate by 0.5% on fixed deposits between 30-45 days. The new rate would be 5% from the existing 4.50%. The new rate would be effective from January 8, it added.

For term deposits having a maturity period of 180-270 days, the rate has been revised upwards by 0.25% to 7.75%.

On the other hand, the interest rate for fixed deposit of 271 days to less than 1 year has been revised downwards by 0.25% to 7.75%, as compared with existing 8.25%.Savers would earn 0.25% lower rate of interest on fixed deposits between 1-3 years and 5-10 years.

Tech Mahindra forms joint venture with Avion Systems

Tech Mahindra formed a joint venture with global telecom technology firm Avion Systems.
Details of the transaction were not disclosed, except that Tech Mahindra will hold a minority stake in the joint venture which will henceforth be called Avion Networks Inc. The joint venture will provide network design and engineering services for the deployment and management of mobile networks and the transformation of these networks to cloud-enabled, virtual and open-systems software driven networks.

Maruti Suzuki, Hyundai, General Motors hike prices by up to Rs 1.27 lakh

Leading manufacturers Maruti Suzuki, Hyundai and General Motors today hiked car prices by up to Rs 1.27 lakh, within days of the government?s withdrawal of excise duty concessions.
The carmarkers attributed the price hike to increased input costs as also to the withdrawal of the duty sops, which were given in February last year and extended till December 31.
The country?s largest car maker Maruti Suzuki India (MSI) hiked prices of its vehicles in the range of Rs 7,850 to Rs 31,600, while rival Hyundai hiked prices in the range of Rs 15,000 to Rs 1,27,000, effective January 1, 2015.

General Motors India also hiked prices of various models in the range of Rs 15,000 to Rs 61,000.
 
Wall Street falls further as Oil route continues

Key U.S. Indices tried to rally early Tuesday morning but the rally soon dissipated as crude continued to plummet to new lows. In the afternoon too, the indices tried to rally but lost ground again.

The Dow Jones Industrial Average fell 130 points or 0.74% to close at 17,372. The blue chip Index went up 79 points in the morning but then fell more than 300 ponts from those levels , before closing with a loss of 130 points.

The S&P 500 lost 18 points or 0.87% at 2,003.  The Nasdaq Composite was the worst hit with a lossl of 60 points or 1.28% at 4,593.

Slumping oil prices and flight to havens such as Treasurys led to a bout of selling for the second consecutive day.

Crude-oil prices extended losses on Tuesday, with U.S. oil futures closed down 4.2% below $48 a barrel for the first time since April 2009. Brent fell 3.8% to $51.10 a barrel.
The yield on the 10-year Treasury fell 13 basis points to 1.9%.

Energy stocks were leading market losses on the continued rout in oil. Exxon Mobil, Chevron , Royal Dutch Shell, Kinder Morgan and Halliburton were all trading lower, while the Energy Select Sector SPDR ETF was down 1.6%.

It hasn't been a great start to the year with benchmark indexes following oil prices deep into the red for the first three days of trading. The year's first three trading sessions haven't seen straight losses since 2005.

That softness was being seen in the domestic economy on Tuesday. December's ISM Services Index slowed to 56.2, missing estimates for a reading of 58.5 and lower than November's 59.3 level. Business activity dropped to 57.2 from 64.4, though new orders showed strength, jumping to 58.9 from 51.4.

Factory orders in November slipped at the same rate as October, down 0.7% to $492.7 billion. Economists had expected a narrower decrease of 0.4%. However, some economists perceive the slowdown less as a sign of economic weakness and more of a reset to a sustainable pace of growth.

AOL shares spiked 3.4% on reports that  Verizon has approached the Internet company for a possible acquisition or venture. Gains were limited, however, after Verizon threw cold water on the report.

Chipmakers were pushed lower, caught up in the broader tech selloff on Tuesday. Among the worst performers, Applied Materials , Analog Devices and Micron Technology all dropped more than 2%. The iShares S&P Semiconductor Index ETF tumbled 2.2%.
Domino's Pizza slid 1.2% after receiving a downgrade to "hold" from Jefferies. The firm said it lowered its rating on the pizza chain based on valuation.

Economic data today

Investors will get a temporary reprieve from the focus on oil on today with the release of the Federal Reserves minutes from their December meeting. At that meeting the central bank promised to be "patient" in determining when to raise interest rates.