NIFTY ACHIEVES 11250 TARGET; 11490 IS IMMEDIATE HURDLE

NIFTY ACHIEVES 11250 TARGET; 11490 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices nosedived 1.6%-1.9%, extending Tuesday's steep losses, on fears of an economic recession.

Three main indices had already fallen 1.1%-1.3% on Tuesday after the Institute for Supply Management said U.S. manufacturing activity fell last month to its lowest level in more than 10 years.

Brent futures fell 2.3% to $57.51 a barrel and WTI futures fell 1.8% to $52.64 a barrel after official data showed a rise in U.S. crude inventories.

European markets tumbled 2.7%-3.2%. A leading German economic institutes revised down German GDP growth for 2019 from 0.8% to 0.5% and cut 2020 projections from 1.8% to 1.1%. Elsewhere, British Prime Minister Boris Johnson presented his final Brexit offer to the European Union.

AT HOME

After a positive start, benchmark indices nosedived more than two and a half percent from top of the day but rebounded smartly in last hour to end lower by a percent. Sensex settled at 38305, down 361 points while Nifty lost 114 points to finish at 11359. BSE mid-cap and small-cap indices tumbled 1.5% and 1.6% respectively. Except a marginally higher Oil & Gas and flat Consumer Durable indices, all the BSE sectoral indices ended in red with Telecom and Realty indices leading the losses, down 4.5% and 3.9% respectively.

FIIs net sold stocks and stock futures worth Rs 1299 cr and 731 cr respectively but net bought index futures worth Rs 164 cr. DIIs were net buyers to the tune of Rs 1503 cr.

Rupee depreciated 21 paise to end at 71.08/$.

Maruti reported 24.4% y-o-y dip in sales at 1.22 lakh units but rose 15% month-on-month (m-o-m). Bajaj Auto sales fell 20% y-o-y to 4.02 lakh units but rose 3% m-o-m. Ashok Leyland sales fell 55% y-o-y to 8780 unit but rose 5.8% m-o-m. M & M total sales fell 21% y-o-y to 43343 units but rose 20% m-o-m. Tractor sales fell 2% y-o-y to 37011 units. Escorts tractor sales rose 2% y-o-y to 10855 units. 

GST collection slipped below Rs 92000 cr in September, hitting its lowest level since February 2018. This was also lower than the last financial year's average monthly collection of Rs 95000 cr.

OUTLOOK

The Office of the U.S. Trade Representative said it will impose tariffs on European Union goods on October 18.

Today, Shanghai continues to be shut while Nikkei and Hang Seng are down 2% and 0.7% respectively. SGX Nifty trading around 11340, suggesting around 90 points lower start when comapred to Tuesday's close of Nifty futures.

In Tuesday's report we had reiterated the view that 11381, the lower end of the gap created by gap up opening on 23rd September, continued to be immediate support below which, 200-DMA, placed around 11250, would be the next support to eye.

Nifty broke 11381 support and plunged all the way to 11248, achieving 200-DMA target and vindicating our view. From there, the index rebounded to end at 11359 but is set to open below 11300 today.

11248, the bottom made on Tuesday, is now the important immediate support to eye. If that breaks, 34-DMA, placed around 11080, would be the next support.

11491 is the immediate resistance on the hourly chart, upon crossover of which 11695, the top made last week, would be the bigger hurdle to eye.

Meanwhile, trading shorts can be held on to with the stop-loss of 11491.