US EQUITIES TUMBLE ON TRADE WAR FEARS; NIFTY SET TO BREAK 10033 SUPPORT

US EQUITIES TUMBLE ON TRADE WAR FEARS; NIFTY SET TO BREAK 10033 SUPPORT

WORLD MARKETS

US indices nosedived 2.4%-2.9% on fears of a potential trade war.

President Trump signed an executive memorandum that would implement tariffs on up to $60 billion in imports from China. The tariffs largely focus on technology sector goods and were intended to penalize China for, according to the Trump administration, stealing intellectual property.

In another high-profile departure from the White House, Trump yesterday replaced national security advisor HR McMaster with hardline Fox News pundit and former UN ambassador John Bolton.

On the back of safe haven buying, the 10-year treasury yield posted its biggest one-day drop since September of last year as investors bid up bond prices, while gold gained 0.5%.

WTI oil fell 1.3% to $64.30/barrel.

The Bank of England held rates steady, although two policymakers unexpectedly dissented and voted for an immediate rate hike. This sent sterling to a fresh seven-week high against the dollar, before reversing to trade lower.

European markets lost 1.2%-1.8%.

AT HOME

After gaining about half a percent in the initial trade, benchmark indices reversed these gains through the session to end with cuts of 0.4%. Sensex lost 130 points to settle at 33006 while Nifty finished at 10115, down 40 points. BSE mid-cap and small-cap indices tumbled 0.8% and 1% respectively. Except 0.8% and 0.4% higher Consumer Durable and Metal indices respectively, all the BSE sectoral indices ended in red with Telecom and Realty indices leading the losses, down 1.3% each.

FIIs net bought stocks, index futures and stock futures worth Rs 161 cr, 224 cr and 611 cr respectively. DIIs were net buyers to the tune of Rs 410 cr.

Rupee ended at 65.10/$, appreciating 10 paise compared to previous close.

OUTLOOK

Today morning, Nikkei is down nearly 4% while Hang Seng and Shanghai are off about 3%. SGX Nifty is suggesting about 110 points lower start for our market.

For past couple of sessions we have been mentioning that 10033, the bottom made in December 2017, is the important support, upon breach of which Nifty can plunge to 9800, where a trendline adjoining bottoms made in February and December 2016 is placed.

Nifty yesterday closed at 10115 and a gap down opening today is likely to take it below the 10033 mark. A breach of the low made in first hour, would further accentuate selling pressure and 9800, as mentioned above, would be the next meaningful support to eye if that happens.

Immediate resistance, after today's gap down opening, would have moved lower to 10170, with the stop-loss of which, trading shorts should be held on to.