TRAIL THE STOP-LOSS TO 17450

 

TRAIL THE STOP-LOSS TO 17450

 

WORLD MARKETS

 

Dow fell half a percent while S & P 500 and Nasdaq slipped 0.9% each on Friday, weighing the prospect of slowing global economic growth and awaiting a Federal Reserve meeting this week.

 

The University of Michigan’s gauge of consumer sentiment rebounded slightly to a preliminary September reading of 71 from a final August reading of 70.3.

 

US 10-year treasury yield advanced by 4 basis points to 1.37%. Dollar index climbed 0.4% to 93.25, hitting its highest level in three weeks. Gold futures fell 0.3% to $1751.40 an ounce.

 

Brent crude fell 33 cents to settle at $75.34 a barrel while WTI fell 64 cents to $71.97.

 

European markets fell 0.8%-1%. U.K. retail sales fell unexpectedly in August, dropping 0.9% month-on-month against a forecast for a 0.5% rise.

 

For the week, US and European markets ended with modest cuts while Hang Seng and Shanghai nosedived 5.8% and 2.6% respectively as concerns about China’s regulatory crackdown and slowing global growth weighed on sentiment. Indian and Japanese equities however gained 1.2% and 0.3% respectively. For the week, Dow and S & P 500 eased 0.1% and 0.6% respectively for their third and second straight week of losses respectively. The Nasdaq Composite dropped 0.5%.

 

In other asset classes, Brent crude gained 3.3% and U.S. crude was up 3.2%, supported by tight supplies due to the hurricane outages and data showing a larger-than-expected drawdown in U.S. crude inventories. Dollar index rose 0.7% to reach 93.25 and Gold fell 1.9% after an unexpected increase in U.S. retail sales raised expectations that the Fed may reduce its stimulus sooner.

 

AT HOME

 

After climbing just under a percent, benchmark indices nosedived more than a percent to end lower by a fifth of a percent, snapping 3-day winning streak. Sensex settled 125 points to settle at 59015 while Nifty lost 44 points to finish at 17585. Nifty mid-cap and small-cap indices slipped 1.3% and 0.7% respectively. BSE Metal and Realty indices tumbled 2.5% and 2% respectively, becoming top losers among the sectoral indices while Bankex and Finance indices were the top gainers, up 0.9% and 0.3% respectively.

 

FIIs net bought stocks and index futures worth Rs 1622 cr and 235 cr respectively but net sold stock futures worth Rs 1878 cr. DIIs were net sellers to the tune of Rs 795 cr.

 

Rupee appreciated 4 paise to end at 73.47/$.

 

For the week, Sensex as well as Nifty gained 1.2% each, extending the winning streak to fourth consecutive week.

 

OUTLOOK

 

Markets in mainland China, Japan and South Korea are closed today for holidays. Hang Seng is trading with cut of more than 2%. SGX Nifty is suggesting around 130 points lower start for our market.

 

In Friday's report we had said that 17900, where an upward sloping trendline adjoining recent tops on the daily chart was placed, was the next target to eye and had advised trailing the stop-loss in long positions to 17430.

 

Nifty, after making a top of 17793, slipped to 17537 before closing at 17585. The benchmark is set to open below 17500 today.

 

17793, the top made on Friday, is the immediate hurdle to eye, upon crossover of which, 18000, where a rising trendline adjoining recent tops is placed, would be the next upside level to eye.

 

On the way down, immediate support on the hourly chart is placed around 17450, upon breach of which, 17300-17250 would be the next support zone.

 

Meanwhile, trading longs can be held on to with the stop-loss of 17460.

 

For Banknifty, 38113, the top made Friday, is the immediate hurdle, upon crossover of which, 38800-38900 would be the next target zone. 36850 is the immediate support, with the stop-loss of which, trading longs can be held on to.