NIFTY LIKELY TO OPEN LOWER, VINDICATING OUR NEGATIVE BIAS; 8038 CONTINUES TO BE IMMEDIATE RESISTANCE

NIFTY LIKELY TO OPEN LOWER, VINDICATING OUR NEGATIVE BIAS; 8038 CONTINUES TO BE IMMEDIATE RESISTANCE

WORLD MARKETS

US indices fell between 0.1% and 0.5% yesterday on caution ahead of the release of minutes from the Federal Reserve's last meeting on Wednesday, with the bank on track to conclude bond purchases this month.

European markets, except a 0.4% lower Italy, gained between 0.1%-0.6%. Data showed that industrial orders in Germany posted the worst fall this August since the height of the global financial crisis. The poor data however stoked hopes of further stimulus from the European Central Bank (ECB).

Gold rose 1.2% to $1207 an ounce; Nymex crude gained 0.7% to $90.3 a barrel.

                                                             

AT HOME

Benchmark indices ended lower by about a fourth of a percent on Wednesday after trading in a narrow range through the trading session, ahead of a long break. Sensex slipped 62 points to settle at 26567 while Nifty finished at 7945, down 19 points. BSE mid-cap and small-cap indices lost 0.2% and 0.4% respectively. Except a 1.9% and 1.4% rise in BSE IT and Teck indices, all other sectoral indices ended in red with Oil & Gas and FMCG indices leading the tally, giving away 1.6% and 1.3% respectively.

India's HSBC manufacturing PMI fell to a nine-month low of 51 in September from 52.4 in August.

FIIs net sold stocks worth Rs 63 cr but net bought index futures and stock futures worth Rs 72 cr and 125 cr respectively. DIIs were net buyers to the tune of Rs 156 cr.

Rupee appreciated 13 paise to close at 61.61/$.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is trading at 7940, suggesting about 40 points lower start compared to Wednesday's close.

For past couple of sessions we have been mentioning that Nifty has confirmed a lower-top lower bottom formation on the daily chart and until this formation is negated, the near term view will continue to be negative. We had also indicated that 8038, the 61.8% retracement level of the recent 8160-7842 fall, is the immediate resistance to eye. Nifty, after touching a high of 8031 on Tuesday, plunged to close the week at 7945 and is set to open further lower today, vindicating our view.

7842, the bottom made on 26th September is the nearest support below which 7785, the 61.8% retracement level of the 7540-8180 upmove, would be the next important support to eye. 8038 continues to be immediate resistance.

India's HSBC Services PMI for September would be released today.