ASIAN EQUITIES JOIN US SELL-OFF

ASIAN EQUITIES JOIN US SELL-OFF

WORLD MARKETS                             

US indices nosedived 3.1%-3.5% on Friday, suffering the worst day in nearly four years, on continued concerns over a China-led global economic slowdown and uncertainty over the timing of a rate hike.

Earlier Shanghai Composite plunged 4.2% after the China flash manufacturing for August came in at a 6-1/2 year low.

Nymex oil fell 87 cents or 2.11% at $40.45 a barrel. Brent fell $1.16 or 2.5% to $45.46 a barrel. Gold rose $6 to $1160 an ounce. Dollar index fell about 1% with the euro hitting a two-month high above $1.13.

European markets too ended with cuts in the vicinity of 3%.

On Weekly basis Dow and S & P 500 sank 5.8% each while Nasdaq lost 6.8%, marking the worst week in four years. European markets plunged 5.6%-7.8% with DAX leading the tally.

AT HOME

After falling more than a percent and half in the initial trade, benchmark indices recouped nearly half of the losses through the day to end lower by nine tenth of a percent. Sensex settled at 27366, down 242 points while Nifty lost 73 points to finish at 8300. BSE mid-cap and small-cap indices lost 0.9% and 0.6% respectively. BSE Realty and Auto indices tumbled 2.6% and 2.1% respectively, becoming top losers among the sectoral indices while IT and FMCG indices gained 0.4% and 0.1% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 2341 cr, 2417 cr and 439 cr respectively. DIIs were net buyers to the tune of Rs 1524 cr.

Rupee slipped 28 paise to end at 68.82/$.

In a big relief to FIIs, a government-appointed committee has recommended that there was no case for imposing the controversial minimum alternate tax (MAT) on FIIs retrospectively, a suggestion that the government is said to be “favourably” considering.

OUTLOOK

Today morning Asian markets are trading with deep cuts of 2%-5% and SGX Nifty is suggesting about 150 points lower opening for our market.

In Friday's report we had mentioned that 8300, in the vicinity of multiple bottoms made in last month or so as well as the lower band of bollinger on the daily chart are placed, is the important support, below which Nifty can slide to 8210, which is the 61.8% retracement level of the entire 7940-8655 upmove.

The benchmark broke through the 8300 support in the opening trade itself and plunged all the way to 8225, but recovered later to end at 8300.

A big gap down opening however, will take the Nifty even lower than the 8210 support. A close below 8210, would open up the possibility of retest of the 7940 bottom made in June.

On the way up, 8322, the top made on Friday, would now act as the immediate hurdle, with the stop loss of which trading shorts should be held on to.