NIFTY NEARLY ACHIEVES 9685 TARGET; 9925 IS THE IMMEDIATE HURDLE

NIFTY NEARLY ACHIEVES 9685 TARGET; 9925 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

Dow and S & P 500 gained 0.2% and 0.4% respectively while Nasdaq surged 1.2% following the unveiling of a long-awaited tax reform plan. Dow broke four-day losing streak and S & P 500 hit a fresh record high on intraday basis.

The framework proposed bringing the corporate tax rate to 20% from 35% and reducing the highest individual income tax rate to 35% from 39.6%.

Durable goods orders showed a 1.7% increase in August. Non-defense capital goods orders excluding aircraft rose 0.9%, versus the 0.3% increase expected. Pending home sales fell 2.6% in August.

Dollar index hit a high of 93.61 before closing at 93.36. The yield on the ten-year U.S. Treasury note rose to 2.31% from 2.2%.

The 2-year yield hit a high of 1.483%, its highest since Nov. 4, 2008. Gold fell for a second straight day to settle at $1,287.80 an ounce.

U.S. crude added 0.5% to settle at $52.14 following a surprise drop in U.S. crude stockpiles. Brent crude however fell 1% to settle at $57.90.

European markets gained 0.2%-0.8%

AT HOME

Sensex and Nifty nosedived 1.4% each, extending the losing streak to seventh straight day and closing at the lowest level since 30th June and 11th August respectively. Sensex settled at 31160, down 440 points while Nifty lost 136 points to finish at 9736. BSE mid-cap and small-cap indices fell 2% and 2.1% respectively. All the BSE sectoral indices ended in red with Realty and Healthcare indices leading the tally, down 2.7% and 2.6% respectively.

FIIs net sold stocks and index futures worth Rs 856 cr and 250 cr respectively but net bought stock futures worth Rs 489 cr. DIIs were net buyers to the tune of Rs 1858 cr.

Rupee plunged 27 paise to end at 6-1/2 month low of 65.72/$.

OUTLOOK

Today morning, except a marginally lower Shanghai, other Asian markets are trading with modest gains and SGX Nifty is suggesting a marginally lower start for our market.

Readers would recall that we have been maintaining negative stance on Nifty after immediate supprt of 10040 was taken out last week. After 34-DMA support, placed around 9940 was taken out, we had said that 9685, the bottom made in August, is the next downside target as well as crucial support to eye.

Nifty yesterday plunged to 9714 before closing at 9735, moving very close to 9685 target and vindicating our view.

9685 continues to be crucial support to eye, a breach of which will also break a higher-top higher-bottom formation on the weekly chart. Next important support in that case would come around 9500, where 34-week moving average is placed.

34-DMA, placed around 9925, is the immediate hurdle, until a crossover of which, the short-term bias will remain negative.