LARGEST GAIN SINCE 2011 FOR US MARKET; 7800 CONTINUES TO BE CRUCIAL SUPPORT FOR NIFTY

LARGEST GAIN SINCE 2011 FOR US MARKET; 7800 CONTINUES TO BE CRUCIAL SUPPORT FOR NIFTY

WORLD MARKETS                             

US indices soared 4%-4.2% yesterday, rebounding from six consecutive days of decline and registering the best single day gain since 2011.

Apart from an oversold state, other catalysts for the rebound were comments from the Fed's William Dudley that a September rate hike looks "less compelling" and a strong durable-goods report.

Orders for durable goods in July rose 2.2%, above the expected 0.1% rise, but down from the 3.4% gain in June.

Earlier, China's central bank said it had injected 140 billion yuan ($21.8 billion) into the interbank money market via short-term liquidity operations (SLOs). On Tuesday, PBoC had lowered interest rates and the reserve requirement ratio (RRR) by 25 basis points and 50 basis points respectively.

European markets plunged 0.8%-1.7%.

Nymex oil fell 71 cents or 1.8% to $38.60 a barrel. Gold fell $13.70 to $1125 an ounce.

AT HOME

After plunging a percent and third in the opening trade, benchmark indices soared nearly 2% from the bottom of the day, only to give away all the gains later to end lower by more than a percent. Sensex settled at 25715, down 318 points while Nifty lost 89 points to finish at 7792. BSE mid-cap index lost 0.8% while the small-cap index gained 0.2%. Except a 1.6% and 0.2% rise in BSE Power and Metal indices respectively, all the sectoral indices ended in red with Bankex and Healthcare indices leading the tally, down 1.7% and 1.1% respectively.

FIIs net sold stocks and index futures worth Rs 2346 cr and 89 cr respectively but net bought stock futures worth Rs 243 cr. DIIs were net buyers to the tune of Rs 1881 cr.

Rupee depreciated 4 paise to end at 66.14/$.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of 2% and SGX Nifty is suggesting about 70 points higher opening for our market.

As mentioned in Tuesday's report Nity is at a very very crucial juncture. 7800 is where 20-month moving average is placed and our study shows that in even steepest of the correction in the 2003-2008 bullrun, the benchmark never closed below 20-month moving average.

This makes 7800 a very crucial support, a monthly close below which would be considered a major trend reversal.  

The benchmark closed at 7792 yesterday but is set to stage a rebound today. On the way up, 8060, the lower level of the big gap down opening seen on Monday, would be the immediate hurdle to eye.

One should wait for the monthly close for taking a fresh directional view on Nifty.