STAY SHORT WITH THE STOP-LOSS OF 10890

STAY SHORT WITH THE STOP-LOSS OF 10890

WORLD MARKETS

US indices, after opening higher, sold-off on Friday to end with cuts of 1.8%-3%.

Stocks initially traded higher after Federal Reserve Bank of New York President John Williams said that the central bank could reassess its interest rate policy and balance sheet reduction in the new year if the economy slows.

However, President Donald Trump's trade adviser, Peter Navarro later said that it would be "difficult" for the U.S. and China to arrive at a permanent economic agreement after a 90-day ceasefire in the trade tensions. Sentiment was also dampened after President Donald Trump said that there is a very good chance the House funding bill will not pass in the Senate and that the administration is prepared for a long shutdown. As Republicans need Democratic votes to pass spending legislation in the Senate, a partial shutdown is all but assured if the GOP insists on funding for the barrier.

US crude fell 29 cents to $45.59 a barrel to close at the lowest level since January 2016.  Brent fell 40 cents to $53.95.

In Europe, FTSE, CAC and DAX ended flat to modestly higher while Italy and Spain tumbled 1% and 0.5% respectively. Data from Italy showed manufacturing confidence dipped to 103.6 in December from a revised 104.3 in November. Meanwhile, business confidence slipped to 99.8 this month, from 101.0 in November.

For the week, US indices nosedived 6.8%-8.3% with the Dow suffering its worst fall in 10 years.  crude collapsed 11% at $45.59, marking the worst fall since January 2016.

AT HOME

Benchmark indices nosedived nearly 2%, wiping out all the gains made during the week. Sensex settled at 35742, down 690 points while Nifty lost 198 points to finish at 10754. BSE mid-cap and small-cap indices fell 1.8% and 1% respectively. All the BSE sectoral indices ended in red with IT and Teck indices leading the losses, down 2.6% each, followed by 2.1% lower Auto index.

FIIs net bought stocks worth Rs 134 cr but net sold index futures and stock futures worth Rs 316 cr and 1204 cr respectively. DIIs were net sellers to the tune of Rs 489 cr.

Rupee depreciated 44 paise to end at 70.14/$.

For the week, Sensex and Nifty fell 0.6% and 0.5% respectively.

GST Council, on Friday, cut rates for 23 items including movie ticket, used tyres, monitor and TV screens.

OUTLOOK

Today morning, Nikkei and Hang Seng are down more than a percent while Shanghai is off 0.3%. SGX Nifty is suggesting about 20 points lower start for our market.

In Friday's report we had reiterated the view that 10850 was the immediate support, a breach of which would trigger a "sell" on the hourly chart and hence had advised a stop-loss of 10850 for long positions.

Nifty broke 10850 support in the morning session and plunged all the way to 10738 before closing at 10754 and is set to open around Friday's low today.

34-DMA, placed around 10700, is the immediate important support to eye. Below 10700, 10660 and 10580, the 50% and 61.8% retracement levels of the recent 10330-10985 upmove, would be the next supports to eye.

Immediate hurdle on the hourly chart is placed around 10890, with the stop-loss of which, trading shorts can be held on to.