NIFTY SET TO TEST 8470-8400 SUPPORT AREA

NIFTY SET TO TEST 8470-8400 SUPPORT AREA

WORLD MARKETS                             

US indices plunged 1.5%-2.4%, with Nasdaq posting its steepest fall in a year on the back of continued concerns over upcoming earning seasons and geopolitical tension in Yemen.

Durable goods orders fell 1.4% in February as against expectation of a 0.4% rise.

Saudi Arabia announced it began military operations in Yemen after Yemeni President Abed Rabbo Mansour Hadi reportedly fled Aden as Houthi militants moved closer to the city.

Gold gained $6 to $1197 an ounce. Nymex oil rose $1.70 or 3.6% to $49.21 a barrel.

European markets fell 0.4%-1.3%. Germany's closely watched Ifo business sentiment index rose to 107.9 in March from 106.8 in February and compared with expectations for a reading of 107.3 

AT HOME

After a positive start, benchmark indices saw a gradual downward drift through the session to end modestly lower, extending the losing streak to sixth straight day. Sensex lost 50 points to settle at 28112 while Nifty finished at 8531, down 12 points. BSE mid-cap and small-cap indices lost 0.5% and 0.7% respectively. BSE Capital Goods and Power indices lost 1.6% and 1.2% respectively, becoming top losers among the sectoral indices while Healthcare and Auto indices were the top gainers, putting on 0.5% and 0.3% respectively.

FIIs net bought stocks worth Rs 813 cr but net sold index futures and stock futures worth Rs 1387 cr and 187 cr respectively. DIIs were net buyers to the tune of Rs 96 cr.

Rupee depreciated 7 paise to end at 62.32/$.

OUTLOOK

Today morning Nikkei is down about a percent and half, other Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 60 points lower opening for our market.

Just to reiterate, ever since Nifty broke 6570, which was the 38.2% retracement level of the 7961-9119 upmove, we have been working with the major downside target of 8404, which is the 61.8% retracement level of this upmove. We had also said that before that 8470, the bottom made in February, would be the intermediate target. The benchmark ended at 8530 yesterday and is set to open with a downward gap today, achieving the 8470 target and coming in closer to the 8404 target.

Traders would do well to book profit in short positions in 8470-8404 area as apart from 8404 being important Fibonacci support, a trendline adjoining recent bottoms on the weekly chart is also placed in the vicinity of this level.

Meanwhile, immediate resistance on the hourly chart has moved to around 8590, which should serve as the stop loss for the short positions.