10610 IS THE NEXT SUPPORT; 10850 IMMEDIATE HURDLE

10610 IS THE NEXT SUPPORT; 10850 IMMEDIATE HURDLE

WORLD MARKETS

US indices plunged 2.2%-2.9% on Monday, suffering their worst Christmas Eve performance in history, on the back of political turmoil in Washington and persisting growth concerns.

Multiple reports said President Donald Trump is discussing how to remove Jerome Powell from his position as chairman of the Federal Reserve. Treasury Secretary Mnuchin sought to calm the fears by tweeting that Trump never suggested firing Powell and doesn't believe he has the right to do so. Additionally, Defense Secretary James Mattis announced he would step down at the end of February, saying his views do not align with the president's.

Mnuchin held calls on Sunday with the heads of the six largest U.S. banks in order to reassure nervous investors that the financial markets and economy were functioning properly

Trump resumed his attack on the Fed on Monday, tweeting that the central bank is "the only problem" with the U.S. economy.

US crude plunged $3.06, or 6.7% to $42.53, the lowest level since June 21, 2017 and Brent fell 6.2%t, or $3.35, to $50.47 a barrel, hitting a 16-month low.

European markets fell 0.5%-1.4%.

U.S. President Trump on Tuesday once again said the Federal Reserve was hiking interest rates too quickly, continuing his open criticism of the central ban.

AT HOME

Benchmark indices fell about eight tenth of a percent, extending the losing streak to second straight day. Sensex lost 272 points to settle at 35470 while Nifty finished at 10663, down 90 points. BSE mid-cap and small-cap indices fell 0.5% and 1.1% respectively. BSE Realty and Metal indices tumbled 2.3% and 2.2% respectively, becoming top losers among the sectoral indices while IT and Teck indices were the top gainers, up 0.5% and 0.4% respectively.

FIIs net sold stocks and stock futures worth Rs 577 cr and 646 cr respectively but net bought index futures worth Rs 205 cr. DIIs were net buyers to the tune of Rs 186 cr.

Rupee appreciated 1 paise to end at 70.13/$.

OUTLOOK

Today morning, Nikkei is up 1.5%, Shanghai is up 0.3% and SGX Nifty is trading around 10640, suggesting about 40 points lower start when compared to Monday's close of Nifty future.

Readers would recall that after Nifty broke 10850 support, we had given downside target of 34-DMA placed around 10700 below which we had said 10660 and 10580, the 50% and 61.8% retracement levels of the recent 10330-10985 upmove, would be the next supports to eye.

Nifty, on Monday, achieved and broke 34-DMA level and fell further to 10649 before closing at 10663 and is set to open around 10620 today.

10610, the 38.2% retracement level of the entire 10004-10985 upmove, is the next support to eye. Below 10610, 10500, the 50% retracement level of the 10004-10985 upmove, would be the next support.

Immediate hurdle on the hourly chart is placed at 10850, with the stop-loss of which, trading shorts can be held on to.