NIFTY REBOUNDS AFTER ACHIEVING 7736 TARGET; 7925 CONTINUES TO BE IMMEDIATE HURDLE

NIFTY REBOUNDS AFTER ACHIEVING 7736 TARGET; 7925 CONTINUES TO BE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices ended with modest cuts after a choppy trade, with materials shares among the hardest-hit for the second session as bleak factory activity data out of the world's top two economies added to growth fears.

China's flash Caixin purchasing managers' index (PMI) for September fell to a six-and-a-half-year low of 47.0 in September. Markit's preliminary US manufacturing PMI for September remained unchanged month-in-month at 53, which was the weakest reading in almost two years.

Energy stocks were pressured as Nymex oil settled down $1.88 or 4.1% at $44.48 a barrel despite initially spiking on a report that US crude inventories fell by 1.9 million barrels.

At the beginning of a visit to the United States this week, Chinese President Xi Jinping said Tuesday that China's financial markets will remain stable. Xi added yesterday that his country was fully capable of maintaining a relatively high growth rate for a long time to come.

Earlier, Shanghai composite ended lower by more than 2%.

European markets, except a 0.8% lower Spain, gained between 0.2%-1.6% with FTSE leading the tally. Eurozone composite PMI for September came at 53.9, down from 54.3 in August and below expectations for a reading of 54.1.

AT HOME

After falling more than a percent in the initial trade, benchmark indices saw a mammoth one and a half percent recovery from the bottom of the day to end higher by nearly half a percent. Sensex settled at 25823, up 171 points while Nifty gained 34 points to finish at 7846. BSE mid-cap and small-cap indices gained 0.5% and 0.7% respectively. Except a 0.3% and 0.03% cut in BSE Power and Teck indices respectively, all the sectoral indices ended in green with Consumer Durable index and Bankex leading the tally, up 1.7% and 1.5% respectively.

FIIs net sold stocks and stock futures worth Rs 1330 cr and 263 cr respectively but net bought index futures worth Rs 173 cr. DIIs were net buyers to the tune of Rs 891 cr.

Rupee depreciated 10 paise to end at 65.975/$.

OUTLOOK

Nikkei, after a five day weekend has opened with cut in the vicinity of a percent and half today. Other Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points lower opening for our market.

In yesterday's report we had mentioned that next downside target to eye is 7736, which is the 61.8% retracement level of the 7540-8055 upmove and that a sustained trading below 7736 would open up the possibility of the retest of the 7540 bottom.

Nifty touched a low of 7723 in the initial trade and saw a smart rebound from there to end at 7846.

7736 continues to be immediate support, a sustained trading below which will open up the possibility of the retest of 7540 bottom as mentioned above. On the way up 7925 continues to be immediate hurdle, above which 8100 would be the major hurdle to eye.