NIFTY ACHIEVES 10550 TARGET; 10417, 10350 NEXT SUPPORTS TO EYE

NIFTY ACHIEVES 10550 TARGET; 10417, 10350 NEXT SUPPORTS TO EYE

WORLD MARKETS

Dow and S & P 500 fell 0.8% each while Nasdaq plunged 1.8% on worries over rising interest rate.

The benchmark 10-year Treasury note yield reached its highest level since 2011, breaking above 3.2%.

Weekly initial jobless claims fell to 207,000, a near 49-year low.

US crude fell 2.7% to $74.33 while Brent was off 1.9% at $84.64 a barrel.

European markets fell 0.4%-1.5% with CAC leading the losses. Sterling climbed almost 0.6% against the dollar amid reports that the U.K. could join a customs union within the European Union.

AT HOME

Market mayhem continued as Sensex and Nifty nosedived 2.2% and 2.4% respectively, suffering worst percentage fall since 2nd February 2018 and 11th November 2016 respective and closing at the lowest level since 28th June 2018 and 24th May 2018 respectively. Sensex lost 806 points to settle at 35169 while Nifty finished at 10599, down 259 points. BSE mid-cap and small-cap indices fell 1.9% and 2.1% respectively. All the BSE sectoral indices ended in red with Oil & Gas and Energy indices leading the losses, down 6.6% each, followed by 3.3% lower IT index.

FIIs net sold stocks, index futures and stock futures worth Rs 2761 cr, 3157 cr and 365 cr respectively. DIIs were net buyers to the tune of Rs 1824 cr.

Rupee depreciated 24 paise to end at 73.58/$.

In a relief to fuel consumers, the Central Government reduced the prices of petrol & diesel by Rs 2.5 per litre effective immediately. The central government reduced the excise duties on petrol & diesel by Rs 1.5 per litre. While, the balance hit of Rs 1 will be taken by the oil marketing companies (OMC). Owing to this news, HPCL, BPCL and IOC plunged sharply. Marketing margins for these companies will come under pressure as they absorb the cost of Rs 1. The Rs 1.5 excise hit which the government will absorb, will lead to reduction in revenues for the government. However the Finance Minister stated that despite the hit in this excise revenue, the government remains committed to its fiscal deficit target of 3.3% of gross domestic product.

ICICI Bank soared following the news that MD and CEO Chanda Kochhar has quit the bank with immediate effect and Sandeep Bakshi has been appointed as MD and CEO for a period of five years.

OUTLOOK

Today morning, Nikkei and Hang Seng are down 0.3% each and SGX Nifty is suggesting about 60-80 points lower start for our market.

In yesterday's report we had said that upon sustained trading below 200-DMA placed around 10775, 10640 and 10550, which are the 61.8% and 67% retracement levels of the entire 9951-11760 upmove, would be the next downside levels to eye.

Nifty broke 200-DMA support at the open itself and plunged all the way to 10547 before closing at 10599, achieving both the targets mentioned above and vindicating our view.

A gap down opening today would take Nifty back in the vicinity of yesterday's low.

10418, the low made in May, is now the next downside support to eye below which 10350, where 20-month moving average is placed, would be the next crucial support. In the event of even 10350 not holding, be prepared for the retest of 9951 mark. 10820-10866, the erstwhile support zone, would now act as the immediate hurdle.

Key event to watch out today would be RBI's monetary policy review where a 25 bps repo rate hike is widely expected. Markets would also watch out whether the stance is changed from neutral to hawkish and other thinks like RBI's view on liquidity, debt market, rupee and growth.