10746 CONTINUES TO BE NEXT SUPPORT; 10990 IMMEDIATE HURDLE

10746 CONTINUES TO BE NEXT SUPPORT; 10990 IMMEDIATE HURDLE

WORLD MARKETS

Dow rose 0.1%, S & P 500 ended flat while Nasdaq fell 0.1% after the U.S. Federal Reserve cut interest rates overnight but appeared divided on its next course of action for the year.

The Fed, as expected, cut its benchmark overnight rate by 25 basis points to a range of 1.75% to 2%. It was, however, divided in its decision to lower rates, with three officials dissenting. Central bank officials are also split on further action this year. Five Fed members wanted to keep rates unchanged while five others supported lowering them to the current range and keeping them there. Seven others wanted at least one more rate cut.

Chairman Jerome Powell told reported the Fed could initiate a “sequence” of rate cuts if the economy slows down, but noted he does not see that right now.

Treasury yields pared their losses from earlier in the day.

Brent crude fell 36 cents, or 0.6%, to $64.21 a barrel while WTI  futures settled 2.1% or $1.23 lower at $58.11 a barrel after Trump said he ordered the Treasury Department to “substantially increase” sanctions on Iran. This was a softer stance compared to threat of military action given by him on Sunday.

European markets, except 0.1% lower FTSE, gained 0.1%-0.7%. Retail inflation in Britain rose at an annual rate of 1.7% last month, after a 2.1% increase in July, marking the slowest rate of expansion since December 2016.

AT HOME

Benchmark indices managed to end higher by a fifth of a percent after a rangebound but choppy session. Sensex settled at 36563, up 82 points while Nifty added 23 points to finish at 10840. BSE mid-cap and small-cap indices gained 0.4% and 0.3% respectively. Except 0.4% and 0.1% lower Telecom and Auto indices respectively, all the BSE sectoral indices ended in green with Realty and Metal indices leading the tally, up 1.5% and 1.3% respectively.

FIIs net sold stocks worth Rs 959 cr but net bought index futures and stock futures worth Rs 542 cr and 601 cr respectively. DIIs were net buyers to the tune of Rs 780 cr.

Rupee appreciated 55 paise to end at 71.23/$.

OUTLOOK

Today morning, Nikkei is up more than a percent while Hang Seng and Shanghai are up about a fourth of a percent each. SGX Nifty is suggesting  a modestly lower start for our market.

In yesterday's report we had said that "10746, the low made on 4th September, is the next downside support to eye" while "Immediate hurdle on the hourly chart is placed around 10990, with the stop-loss of which, trading shorts can be held on to".

Nifty, after touching a high of 10885 in the initial trade, slipped to end at 10840 and is set to open modestly lower today.

10746, the low made on 4th September, continues to be next downside support, upon breach of which, 10637, the low made in August, would be the crucial support.

10990 continues to be immediate hurdle, with the stop-loss of which, trading shorts can be held on to.