NIFTY RETREATS FROM 8670 HURDLE; 8500 SUPPORT UNDER TEST

NIFTY RETREATS FROM 8670 HURDLE; 8500 SUPPORT UNDER TEST

WORLD MARKETS                             

US indices fell 0.6%-0.7% yesterday on jitters over the U.S. presidential election.

Market expectations that Democratic nominee Hillary Clinton would win were thrown into flux last week, when FBI said it was looking into new emails related to the former secretary of State. While an NBC News/SurveyMonkey poll released Monday afternoon showed Clinton's 6-point lead over Republican nominee Donald Trump remains virtually unchanged, data compiled by RealClearPolitics shows Clinton's lead over Trump has narrowed significantly since last week. Trump victory is expected to bring uncertainty and a surge in financial market volatility.

This view was played out in markets last night with the US dollar falling sharply and gold rallying $15 to $1288 per ounce.

October read on the Markit manufacturing PMI came in at 53.4, above September's number of 51.5. The ISM manufacturing index for October met expectations at 51.9, while construction spending data for September missed consensus.

Nymex as well as Brent oil fell 0.6% each to settle at $46.39 and $47.90 a barrel after the American Petroleum Institute (API) said crude inventory rose by higher-than-expected 9.3 million barrels in the week to October 28.

European markets fell 0.5%-1.3%

Earlier, both the Reserve Bank of Australia and the Bank of Japan decided to keep their policies unchanged.

AT HOME

After rising about half a percent, benchmark indices gave away all the gains in late noon trade to end flat to modestly lower. Sensex settled at 27877, down 54 points while Nifty finished flat at 8626. BSE mid-cap and small-cap indices fell 0.2% each. BSE Metal index soared 3.3%, becoming top gainer among the sectoral indices, followed by 1.4% rise in Basic Materials index. IT and Consumer Durables indices were the top losers, down 1.2% and 1.1% respectively.

FIIs net sold stocks and index futures worth Rs 124 cr and 535 cr respectively but net bought stock futures worth Rs 696 cr. DIIs net bought stocks worth Rs 192 cr.

Rupee appreciated 9 paise to end at 66.71/$.

India's Nikkei/Markit Manufacturing PMI shot up t 54.4 in October, a 22 month high, from September's 52.1 level.

Maruti Suzuki's October sales fell 0.3% y-o-y to 1.33 lakh units. Ashok Leyland sold 12533 vehicles (the highest monthly sales since March 2016), higher by 28% y-o-y. Eicher reported 33% jump in Royal Enfield sales at 44522 units. Tata Motor reported a 21% growth at 52813 units.

OUTLOOK

Today morning Asian markets are trading with cuts of 0.3%-1.2% and SGX Nifty is suggesting about 80 points lower start for our market.

In yesterday's report we had reiterated the view that 8670 continues to be immediate hurdle on the hourly chart, a crossover of which is required for the fresh upmove. Yesterday, the benchmark, after touching a high of 8670, slipped to close at 8626 and is set to open with a big down gap today which will take it closer to the crucial 8500 support.

8500, as we have been mentioning, has been the floor in last two month consolidation phase and upon breach of 8500. Next meaningful support will come only around 8300 where 34-week moving average is placed.

Traders should wait for the crossover of 8670 for squaring-off existing shorts while breach of 8500 should be awaited for further weakness.

The Federal Reserve will finish its two-day meeting today. No hike in interest rate is expected in this meeting.