10850 CONTINUES TO BE IMMEDIATE SUPPORT; 11090 ABOVE 10985

10850 CONTINUES TO BE IMMEDIATE SUPPORT; 11090 ABOVE 10985

WORLD MARKETS

Dow nosedived 2% while S & P 500 and Nasdaq fell 1.6% each on continued jitters over Fed policy statement, government shutdown fears and concerns over US-China relations. The Dow and Nasdaq posted their lowest closes since October 2017, while the S&P 500 finished at its lowest level since September 2017.

On Wednesday, the Fed's statement and Chairman Jerome Powell's subsequent press conference did not suggest that the central bank would slow its pace of rate hikes as quickly as some had hoped. Fed's decision to allow its balance sheet to run off at its current pace also continued to weigh on the sentiment.

House Speaker Paul Ryan announced that Trump would not sign the temporary funding bill without funding for the US-Mexico wall. Following the announcement, more political turmoil in the White House ensued when Defense Secretary James Mattis resigned from his post over disagreements with Trump.

Also weighing on sentiment, the Trump administration and more than a dozen international allies condemned Beijing for what the coalition views as continued efforts by the Chinese to steal other countries' trade secrets. Also, the U.S. Department of Justice charged two Chinese nationals yesterday for participating in a global hacking campaign. Prosecutors also accused the two of operating in conjunction with the Chinese government.

US crude tumbled $2.29 or 4.8% to 17-month low of $45.88 and Brent fell $2.89 or 5.05% to $54.35 a barrel as concerns surrounding oversupply and the outlook for the market's demand weighed.

European markets fell 0.8%-2%. The Bank of England (BOE) held interest rates steady.

AT HOME

After falling about eight tenth of a percent in the initial trade, benchmark indices recouped most of the losses through the session to end just marginally lower, breaking seven-day winning streak. Sensex settled at 36431, down 52 points while Nifty lost 15 points to finish at 10951. BSE mid-cap and small-cap indices ended higher by 0.1% each. BSE Telecom and Metal indices tumbled 1.2% and 1.1% respectively, becoming top losers among the sectoral indices while Capital Goods and Industrial indices were the top gainers, up 0.6% and 0.4% respectively.

FIIs net sold stocks and stock futures worth Rs 386 cr and 552 cr respectively but net bought index futures worth Rs 300 cr. DIIs were net buyers to the tune of Rs 88 cr.

Rupee appreciated 70 paise to end at 69.70/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.5%-1% and SGX Nifty is suggesting about 30 points lower start for our market.

In yesterday's report we had said that 10985, the top made Wednesday, was the immediate hurdle above which 11090 would be the next target and had asked trailing stop-loss in long positions to 10850.

Nifty, after touching a low of 10880, rebounded to end at 10951 and is set to open modestly lower today.

10985, the top made Wednesday, continues to be immediate hurdle above which, 11090, the 61.8% retracement level of the entire 11760-10004 fall, would be the next target/resistance to eye.

10850 continues to be immediate support, with the stop-loss of which, trading longs can be held on to.