NIFTY REBOUNDS FROM 10300-10150 SUPPORT ZONE; 10827 IS THE IMMEDIATE HURDLE

NIFTY REBOUNDS FROM 10300-10150 SUPPORT ZONE; 10827 IS THE IMMEDIATE HURDLE

WORLD MARKETS

US indices ended with gains of nearly 5% yesterday after a wild session, weighing the prospects of fiscal stimulus to curb slower economic growth stemming from the coronavirus outbreak. On Monday, US indices had fallen 7.3%-7.8%, with the Dow and S & P 500 posting their worst day since 2008.

President Donald Trump floated on Monday the idea of “a payroll tax cut or relief” to offset the negative impact from the coronavirus.

Treasury yields rebounded, with the 10-year rate hovering above 0.6% while the 2-year yield traded at 0.48%. The 30-year bond yield climbed back above 1% to trade at 1.133%.

Brent crude rose $2.86, or 8.3%, to $37.22 per barrel, while WTI futures surged 10.38%, or $3.23, to $34.36 after Russian Energy Minister Alexander Novak said that Moscow had not ruled out measures with OPEC to stabilize oil markets. On Monday, WTI and Brent nosedived 24% for their worst decline since 1991 and closed at a more than 4-year low.

In Europe, FTSE fell 0.1%, CAC and DAX fell 1.5% each while Italy and Spain tumbled more than 3%. On Monday, European markets saw cuts of 7.7%-11.2%.

AT HOME

In sympathy with sell-off in other Asian and European markets and meltdown in oil, our own benchmark indices nosedived nearly 5%, suffering the biggest percentage fall in nearly 4-1/2 years. Sensex settled at 35634, down 1941 points while Nifty lost 538 points to finish at 10451. Sensex closed at the lowest level since 19th February 2019 while Nifty hit the lowest level since 1st November 2018. BSE mid-cap and small-cap indices fell 4.7% and 4.2% respectively. All the BSE sectoral indices ended in red with Energy and Metal indices leading the losses, down 9.7% and 7.6% respectively.

FIIs net sold stocks worth Rs 6596 cr but net bought index futures and stock futures worth Rs 222 cr and 593 cr respectively. DIIs were net buyers to the tune of Rs 4975 cr.

Rupee depreciated 38 paise to end at 74.11/$.

OUTLOOK

Today morning, Hang Seng and Shanghai are little changed while Nikkei is down half a percent. US futures are down nearly 2%. SGX Nifty is trading around 10420, suggesting about 40 points lower start when compared to Monday's close of Nifty futures.

In Monday's report we had said that 10637, the bottom made in August 2019, was the immediate support to eye below which 10300-10150 would be the next support zone, as 10300 is where lower band of Bollinger on monthly chart is placed while 10150 is where a trendline adjoining bottoms made in March and October 2018 lands support.

Nifty broke 10637 support in first hour itself and plunged all the way to 10294, from where it rebounded to end at 10451.

10300-10150 continues to be important support zone as 10300 is where lower band of Bollinger on monthly chart is placed while 10150 is where a trendline adjoining bottoms made in March and October 2018 lands support.

10751-10827, the gap created by Monday's gap down opening, would now act as immediate resistance zone.

Meanwhile, trading shorts can be held on to with the stop-loss of 10827.