NIFTY REBOUNDS FROM THE VICINITY OF 10040 SUPPORT

NIFTY REBOUNDS FROM THE VICINITY OF 10040 SUPPORT

WORLD MARKETS                             

US indices fell 0.2%-0.5% with the Dow breaking a nine-day winning streak, digesting the prospects of interest rate hike in December. Financial stocks however rose as higher interest rates generally correlate with increased profits for the sector.

The yield of the benchmark 10-year U.S. Treasury note stood at 2.2782%. Dollar index, after touching a high of 62.66, slipped to end at 62.19, the previous close being 92.45.

Trump signed a new measure that expanded Treasury Department's authority to target people and institutions conducting business with North Korea. In turn, North Korean leader Kim Jong Un has said that Trump would "pay dearly" for his speech at the United Nations earlier this week.

European markets, except a 0.1% lower FTSE, gained 0.2%-0.6%.

Earlier, S&P downgraded China's sovereign credit rating to A+ from AA-, citing country's credit growth as a risk. The downgrade from S&P put its rating in line with Moody's and Fitch.

AT HOME

After plunging about eight tenth of a percent in first hour, benchmark indices recouped most of the losses through rest of the session to end modestly lower. Sensex settled at 32370, down 30 points while Nifty lost 19 points to finish at 10122. BSE mid-cap and small-cap indices fell 0.3% and 0.5% respectively. BSE Realty and Consumer Durable indices tumbled 2.3% and 1.4% respectively, becoming top losers among the sectoral indices while Healthcare index jumped 2.7%, becoming top gainer, followed by 0.2% higher IT index.

FIIs net sold stocks, index futures and stock futures worth Rs 1205 cr, 376 cr and 103 cr respectively. DIIs were net buyers to the tune of Rs 1417 cr.

Rupee plunged 54 paise to end at 64.81/$, marking a near three month low.

Finance Minister Arun Jaitley yesterday said the government would take all the necessary steps to boost the Indian economy and measures are being mulled to strengthen bank balance sheets by recapitalizing public sector undertaking (PSU) banks.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.3%-0.8% and SGX Nifty is suggesting about 50 points lower start for our market.

In yesterday's report we had reiterated the view that 10040, the bottom made last Friday, continues to be immediate support, with the stop-loss of which trading longs should be held on to.

Yesterday, Nifty, after touching a low of 10058, rebounded smartly to end at 10122, holding on to 10040 support and vindicating our view.

10040 continues to be immediate support upon breach of which 34-DMA, placed around 9950, would be the next major support.

On the way up, 10180, the top made on Tuesday, is the immediate hurdle, above which 10220 would be the next target.

Traders are advised to maintain the stop-loss of 10040 in long positions.