EUROPE, US CLIMBS ON CHINA STIMULUS; NIFTY NEAR CRUCIAL SUPPORTS

EUROPE, US CLIMBS ON CHINA STIMULUS; NIFTY NEAR CRUCIAL SUPPORTS

WORLD MARKETS

US indices surged 0.9%-1.3% amid an unexpected stimulus from China's central bank as investors kept eyeing corporate earnings.

On Sunday, China's central bank lowered the reserve requirement ratio for all banks by 100 basis points. The wider-than-expected cut was the People's Bank of China's second reduction in two months, and marks a continuing effort by the world's second-largest economy to combat slowing growth.

Morgan Stanley earned an adjusted 85 cents per share, beating estimates of 78 cents, with revenue also above forecasts.

Key European markets gained 0.8%-1.7%

Nymex crude rose 1.2% or 64 cents to $56.38 per barrel.

                                                             

AT HOME

After a flattish start, benchmark indices saw a sustained downward move through the session to end with deep cuts of nearly 2%, registering largest single day fall since 26th March and closing at the lowest level since 27th March. Sensex plunged 556 points to settle at 27886 while Nifty finished at 8448, down 158 points. BSE mid-cap and small-cap indices lost 1.9% and 2% respectively. All the BSE sectoral indices ended in red with Realty and FMCG indices leading the tally, giving away 2.7% each.

FIIs net sold stocks, index futures and stock futures worth Rs 1507 cr, 1339 cr and 199 cr respectively. DIIs were net buyers to the tune of Rs 962 cr.

Rupee nosedived 55 paise to hit one month low of 62.91/$.

OUTLOOK

Today morning, Hang Seng is up more than a percent, Nikkei and Shanghai are up more than half a percent and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that after advising booking profits in the 8800-8860 resistance zone, we turned our bias on Nifty negative when 8722 was broken last Thursday. We were working with the major downside taret of 8490, which was the 61.8% retracement level of the 8269-8845 upmove.

The benchmark yesterday plunged to 8423 before closing at 8448, achieving the target mentioned above and vindicating our view.

After yesterday's fall, Nifty is close to some crucial supports. 34-week moving average is placed at 8416 and a trendline adjoining recent bottoms on the weekly chart lands support around 8350. Below 8350, 8269, the bottom made in March, would be the major support to eye.

Traders are advised to book profit in short positions as 8350 approaches.

Wipro and HCL Tech will report their quarterly earnings today.