NIFTY SOARS TO CLOSE IN 8740 HURDLE; MPC INTEREST RATE DECISION IN FOCUS

NIFTY SOARS TO CLOSE IN 8740 HURDLE; MPC INTEREST RATE DECISION IN FOCUS

WORLD MARKETS                             

US indices fell 0.2%-0.3% yesterday, digesting mixed economic data and keeping an eye on Deutsche Bank and oil prices.

The September Markit Manufacturing PMI came in at 51.5, a three-month low. The ISM manufacturing index for September came in at 51.5, up from 49.4 in the previous month. Construction spending fell 0.7% in August, as against expectation of a 0.2% increase.

WTI oil rose 1.2% to $48.81 per barrel after Iran's president called on other oil producers to join OPEC in supporting the market with output cuts. Brent prices broke above $50, hitting their highest level since August.

Dollar index rose 0.24%. Gold fell $4.40 to $1313 per ounce.

European markets ended mixed with FTSE climbing 1.2%, CAC up 0.1% while Italy and Spain lost 0.8% and 0.3% respectively. US listed shares of Deutsche Bank fell about 2%, with no official deal being announced between the Bank and the US Department of Justice. British Prime Minister Theresa May said Sunday she'd start the Brexit process in the early part of 2017, a process which is expected to take about two years to complete. The British pound fell about 1 percent against the dollar on Monday, trading at $1.285

AT HOME

Benchmark indices soared nearly a percent and half, registering best single day gain in nearly a month. Sensex added 377 points to settle at 28243 while Nifty finished at 8738, up 127 points. BSE mid-cap and small-cap indices climbed 2.4% and 2.7% respectively. All the BSE sectoral indices ended in green with Realty and Consumer Discretionary Goods & Services indices leading the tally, up 3% and 2.8% respectively.

FIIs net bought stocks and stock futures worth Rs 34 cr and 663 cr respectively but net sold index futures worth Rs 159 cr. DIIs were net buyers to the tune of Rs 198 cr.

Rupee appreciated 3 paise to end at 66.59/$.

Hero MotoCorp registered highest ever monthly sales of 6.7 lac units, a growth of 11% y-o-y. TVS sold 26% higher vehicles at 2.93 lac units. Escort's sales surged 37.8% to 7725 units. M & M sold 69% more tractors at 30562 units. Bajaj Auto total sales were down 2% at 3.7 lac units.

After growing at the fastest clip in 13 months in August, the widely-tracked Nikkei purchasing managers’ index (PMI) survey showed that PMI was 52.1 in September, slightly down from 52.6 in August.

OUTLOOK

Mainland Chinese markets are shut for the Golden Week public holidays. Other Asian markets are trading with gains of 0.2%-0.6% and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that after Nifty rebounded from the vicinity of the crucial 8540 support we had mentioned that 8740 is the immediate hurdle, a sustained trading above which will generate a buy on the hourly chart and would pave the way for further upmove.

The benchmark soared to touch a high of 8745 and closed at 8738, kissing the 8740 hurdle mentioned above.

Upon crossover of 8745, next target to eye would be 8800, which was the top made last Thursday, when the announcement of "surgical strike" came. Above 8800, 8893 the top made on 22nd September, would be the bigger hurdle to eye.

Traders can initiate long positions with the stop-loss of 8690, which is the immediate support on the hourly chart, once 8745 is crossed.

Key event to watch out today would be the interest rate decision to be taken by the newly formed Monetary Policy Committee. Till now, the decision to fix the policy rates was entirely in the hands of the RBI Governor. From now on, however, it will be decided by the MPC, comprising three members from the RBI and three others nominated by the government, with the Governor (Patel) holding the veto power to vote in case of a tie. Arguments in support of a rate cut stem from a good monsoon in most parts of the country, industrial growth contracting 2.4% in August and GDP growth slowing to 7.1% in the June quarter from 7.9% in the preceding one. Consumer inflation has fallen to 5.05% in August from 6.07% a month earlier (July). However, some argue that the Monetary Policy Committee (MPC) may just want to wait a little longer before resorting to any monetary easing. The decision will be out at 2.30 pm, followed by RBI governor's press conference at 2.45 pm.