US INDICES SOAR ON FED MINUTES; BRENT OIL AT 27-MONTH LOW

US INDICES SOAR ON FED MINUTES; BRENT OIL AT 27-MONTH LOW

WORLD MARKETS

US indices soared between 1.6%-1.9%, recovering from previous Tuesday’s sell-off, on the back of minutes of the latest Fed meeting.

The report showed that the Federal Reserve staff cut their growth outlook due to the higher dollar, as a number of committee participants had concerns with global weakness. The minutes showed a heated debate on forward guidance. Some members argued that current language painted the wrong picture on the timing of rate hikes and pushed for rate hikes to be more dependent on economic data.

Analysts say the minutes gave the impression that no action will be taken at the Fed's October meeting.

European markets lost between 0.2%-1%. European airlines posted sharp declines, with analysts citing the spread of Ebola to Spain as a key reason for the fall.  Sentiment was further dampened after the Organization for Economic Cooperation and Development (OECD) said it expected the euro zone economy to slow over the coming months.

Nymex crude lost $1.5 to end at $87.3 a barrel, its lowest close since April 2013. Brent oil fell 73 cents to $90.6, the lowest since June 2012. Gold lost $6.4 to $1206 an ounce.

                                                             

AT HOME

Benchmark indices ended marginally lower after a range bound but choppy session, closing at the lowest level since 14th August. Sensex lost 25 points to settle at 26247 while Nifty finished at 7843, down 10 points. BSE mid-cap index lost 0.2% while the small-cap index gained 0.1%. BSE IT and Healthcare indices nosedived 3.4% and 3.3% respectively, becoming top losers among the sectoral indices while Oil & Gas and Capital Goods indices gained 1.7% and 1.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 1441 cr, 196 cr and 679 cr respectively. DIIs were net buyers to the tune of Rs 663 cr.

Rupee appreciated 3 paise to close at 61.3975/$.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of half a percent and SGX Nifty is suggesting about 35 points higher opening for our market.

Ever since Nifty confirmed a lower-top lower-bottom formation on the daily chart by closing below 7925 on 25th September, we had been working with a downside target of 7785, which is the 61.8% retracement level of the 7540-8180 upmove.

The benchmark touched a low of 7816 yesterday, coming in very close to this target, from where it recovered to end at 7843. Moreover many sectoral indices like CNX Bank, Commodity, Infra, Metal and Realty have formed positive divergence on the daily chart which suggests that the selling pressure has abated.

Therefore, traders are advised to book profit in short positions and wait for the breach of 7785 for taking fresh negative view on Nifty. On the way up, 7930 is the immediate resistance, a crossover of which is required to generate a buy on the hourly chart, which in turn can open up the space for the further upside till 8030. This makes 7785-7930 a no-trading zone for Nifty.