9951 NEXT MAJOR SUPPORT BELOW 10261; 10760 IS IMMEDIATE HURDLE

9951 NEXT MAJOR SUPPORT BELOW 10261; 10760 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices fell 0.6%-1.2% on Friday as interest rates rose to multi-year high following mixed employment data.

The U.S. economy added 134,000 in September, well below the expected gain of 185,000. However, the U.S. unemployment rate fell to 3.7%, its lowest level since 1969. Wages grew by 2.8% y-o-y to match expectations.  Job gains for August was revised sharply upwards to an addition of 270,000 jobs from 201,000.

The 10-year note yield rose to 3.24% and hit a fresh high since 2011.

U.S. trade deficit widened to $53.2 billion in August.

WTI crude rose 1 cent to $74.34 a barrel and Brent fell 20 cents to $84.38.

European markets fell 0.6%-1.4%. Basic resources stocks were the worst performers Friday amid heightened global trade war fears.

For the week, Dow ended flat while S & P 500 fell 1% and Nasdaq plunged 3.2%, registering largest weekly fall since the week ended 23rd March 2018. In Europe, DAX was flat while FTSE and CAC tumbled 2.6% and 2.4% respectively. In Asia, Hang Seng nosedived 4.2% while Nikkei was off 0.6%. Shanghai was shut for the week. Ishare MSCI Emerging index fund tumbled 4.8%.

AT HOME

Bloodbath on dalal street extended to the last day of the week as Sensex and Nifty nosedived 2.2% and 2.7% respectively to close at the lowest level since 23rd May and 4th April respectively. Sensex settled at 34376, down 792 points while Nifty lost 282 points to finish at 10316. BSE mid-cap and small-cap indices fell 2.7% and 2% respectively. BSE Oil & GAs and Energy indices collapsed 12.7% and 8.5% respectively, becoming top losers among the sectoral indices while IT, Teck and Consumer Durable indices were the sole gainers, up 1.1%, 0.7% and 0.6% respectively.

FIIs net sold stocks and index futures worth Rs 3370 cr and 1610 cr respectively but net bought stock futures worth Rs 120 cr. DIIs were net buyers to the tune of Rs 1902 cr.

Rupee depreciated 19 paise to end at 73.77/$.

For the week, Sensex and Nifty fell 5.1% and 5.6% respectively, registering largest weekly fall since 12th February 2016.

RBI's Monetary policy committee kept the repo rate unchanged, as against the widely expected 25-bps hike. It however changed its policy stance from "Neutral" to "Calibrated tightening". The inflation forecast for second half of FY19 was cut to 3.9%-4.5% from 4.8% earlier while FY19 GDP growth estimate was kept unchanged at 7.4%.

OUTLOOK

Today, Shanghai has opened after a week-long holiday and is trading with cuts of nearly 2%. Nikkei is shut and Hang Seng is up about half a percent. SGX Nifty is trading around 10290, which is about 50 points lower compared to Friday's close of Nifty futures.

Readers would recall that after 200-DMA support, placed at 10775, was taken out, we had given target of 10550, the 67% retracement level of the entire 9951-10760 upmove.  After the same was hit on Thursday, we had given next level of 10350 on Friday, which is where the 20-month moving average is placed. We had also said that if 10350 does not hold, one should be prepared for the retest of 9951 bottom.

Nifty, on Friday, plunged to 10261 before closing at 10316, achieving 10350 target and vindicating our view.

10261, the bottom made on Friday, coincides with a trendline adjoining bottoms made in September 2017 and March 2018. Upon sustained trading below 10261, 9951, the bottom made in March, would be the next meaningful support to eye.

One must remember that the momentum on the downside has picked up and in the event of even 9951 not holding, 9687, the bottom made in September 2017, followed by 34-month moving average, placed around 9460, would be next major supports to eye.

10760 is the immediate hurdle on the hourly chart.