NIFTY SET TO TEST 200-DMA

NIFTY SET TO TEST 200-DMA

WORLD MARKETS

US indices gained 0.1%-0.3%, but closed off the day high, weighing positive and negative effects from rising interest rates after the release of strong U.S. economic data.

A report from ADP and Moody's Analytics showed private payrolls in the U.S. increasing by 230,000 in September — the highest in seven months. The ISM non-manufacturing index reached its highest level on record.

The benchmark 10-year note yield traded near 3.14%, hitting its highest level since 2011. Dollar index rose more than half a percent to 95.99.

Reacting to rising rates, utilities and consumer product companies fell while Banks rose.

In a media interaction, Federal Reserve Chairman Jerome Powell said the U.S. central bank was "a long way" from neutral on interest rates

US oil rose 1.6% to $76.41 a barrel, touching fresh as the market focused on upcoming U.S. sanctions on Iran and shrugged off a surprisingly big build in U.S. crude stockpiles and reports of higher Saudi Arabian and Russian production. Brent rose 1.8% to $86.29, its best level since October 2014.

European markets added 0.4%-0.8%. An Italian newspaper reported that the government was planning to lower its deficit from 2.2% in 2020, to 2% in 2021, from an expected 2.4% next year.

AT HOME

Benchmark indices nosedived nearly a percent to close at the lowest level since 9th July 2018. Sensex lost 550 points to settle at 35975 while Nifty finished at 10858, down 150 points. BSE Mid-cap index tumbled 1.1% but Small-cap index managed to end higher by 0.2%. BSE Bankex and Telecom indices nosedived 2.9% and 2.8% respectively, becoming top gainers among the sectoral indices while Metal index soared 1.7%, becoming top gainer, followed by 0.65 higher Oil & Gas index.

FIIs net sold stocks, index futures and stock futures worth Rs 1550 cr, 700 cr and 50 cr respectively. DIIs were net buyers to the tune of Rs 1402 cr.

Rupee depreciated 43 paise to end at 73.34/$.

Government yesterday announced a 6% hike in wheat support price to Rs 1,840 per quintal and up to 21% increase in other rabi crops.

RBI has allowed state-owned oil marketing companies to raise $10 billion from overseas market to meet their working capital needs.

OUTLOOK

Today morning, Nikkei is down 0.2% and Hang Seng is off 1%. SGX Nifty is trading around 10775, suggesting a whopping 115 points lower start for our market.

For past many sessions, we have been saying that 34-week moving average and 200 DMA are important support levels to eye. Nifty, on Monday, after touching a low of 10821, which exactly coincided with 34-week moving average, rebounded sharply to 11035 only to come back to close at 10858 yesterday.

A huge gap down today is expected to take the benchmark near the 200-DMA placed around 10775.

Upon sustained trading below 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.

11035, the top made on Monday, would now be the immediate hurdle.