COMMODITIES PLUNGE ON DOLLAR STRENGTH; NIFTY RETREATS FROM ANTICIPATED RESISTANCE

COMMODITIES PLUNGE ON DOLLAR STRENGTH; NIFTY RETREATS FROM ANTICIPATED RESISTANCE

WORLD MARKETS

US indices fell between 0.2%-0.3% yesterday, ending September month with modest cuts.

Economic reports came in below expectations. Conference Board's consumer confidence index fell to 86 in September from 93.4 the month before and below an expected 92.5. The S&P/Case-Shiller index of property prices also came in below expectations, rising 6.7% from July 2013. The Chicago PMI for September came in at 60.5, less than the expected 61.9 estimate.

European markets, except a 0.4% lower FTSE, gained between 0.5% and 1.8%. Euro zone inflation slowed to 0.3% in September, largely as expected. Euro zone unemployment was unchanged from last month at 11.5%, and also in line with expectations. Meanwhile, German retail sales in August saw their sharpest rise in more than three years.

Dollar index soared to 85.92, marking the highest monthly close since June 2010. Nymex crude plunged 3.6% to $91.2 a barrel, posting biggest daily decline since 2012. Brent crude fell $2.5 to $94.7, its lowest since June 2012. Gold lost 0.6% to $1212 an ounce.

For the month, Dow lost 0.3%, S & P 500 fell 1.6% and Nasdaq was down 1.9%.

Later in the day, U.S. confirmed one case of the Ebola virus.

                                                             

AT HOME

After gaining nearly a percent in the morning trade, benchmark indices saw a sudden fall in the noon trade, erasing all the intraday gains and ended little changed. Sensex settled at 26630, up 33 points while Nifty gained 6 points to finish at 7965. BSE mid-cap and small-cap indices gained 0.1% each. BSE  Consumer Durable and Healthcare indices gained the most among the sectoral indices, rising 1.4% and 1.1% respectively while Realty and Metal indices lost 2.7% and 1% respectively.

RBI, as expected, left key rates unchanged and also sent a  strong signal that it will refrain from cutting interest rates until it is confident that consumer inflation can be reduced to a target of 6% by January 2016.

FIIs net sold stocks worth Rs 486 cr but net bought index futures and stock futures worth Rs 232 cr and 323 cr respectively. DIIs were net buyers to the tune of Rs 201 cr.

Rupee fell 21 paise to close at 61.47/$.

India's core sector growth for August picked up with eight core sector industries growing by 5.8% against 4.7% in same month last year and 2.7% in July.

Fiscal deficit for April-August period touched 75% of the full year target.

OUTLOOK

China's official manufacturing PMI has come in unchanged from the previous month at 51.1.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points lower opening for our market.

For past two days, we have been mentioning that while Nifty had rebounded from an important trendline support placed around 7840, the near term trend will turn bullish only after the resumption of the higher-top higher-bottom formation on the daily chart. We had also mentioned that 8038, the 61.8% retracement level of the recent 8160-7842 fall, is the immediate resistance to eye.

Nifty, after touching a high of 8031, plunged to close at 7965 yesterday, vindicating our view.

8038 continues to be important immediate resistance, a crossover of which is required to negate the immediate bearish view. 7842, the low made last week, continues to be immediate support.

Auto companies will report their September sales figures. 

Indian markets will remain shut tomorrow, on Friday and on Monday on account of Mahatma Gandhi Jayanthi, Dussehra and Bakri Id respectively.