NIFTY ACHIEVES 8690 TARGET; 8800 IS THE IMMEDIATE HURDLE

NIFTY ACHIEVES 8690 TARGET; 8800 IS THE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices gained 0.6%-0.9% yesterday, despite a sharp fall in oil prices, on the back of the first presidential debate and a beat on consumer confidence.

Democratic candidate Hillary Clinton was seen as having an upper edge over her opponent Republican hopeful Donald Trump at the first U.S. presidential debate.

U.S. Consumer Confidence Index hit 104.1 in September, notably higher than the 99.0 print expected. The read was also the highest since the recession. The S&P CoreLogic Case-Shiller 20-City Composite index rose 5% y-o-y, slightly below the expected 5.1% increase. The September Markit Flash U.S. Services PMI showed expansion.

US crude fell 2.7% to $44.67 a barrel while Brent lost 3% to $45.97 as hopes for an output-limiting deal during an oil producer meeting in Algeria faded. 

Gold fell $14 to $1330 per ounce.

European markets fell 0.2%-0.4%.  Deutsche Bank shares hit a fresh all-time, weighing on European equities. Volkswagen shares fell on reports that the U.S. Department of Justice was calculating what criminal fine it could levy on the carmaker.

AT HOME

After gaining about half a percent in the initial trade, benchmark indices tumbled about seven tenth of a percent from the top of the day to end lower by a fifth of a percent, extending the losing streak to third straight day. Sensex settled at 28224, down 71 points and Nifty lost 17 points to finish at 8706. BSE mid-cap and small-cap indices however managed to end 0.1% higher. BSE Telecom and Capital Goods indices were the top losers among the sectoral indices, down 1.5% and 1.1% respectively while IT and Healthcare were the top gainers, up 0.7% and 0.6% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 155 cr, 356 cr and 17 cr respectively. DIIs were net buyers to the tune of Rs 91 cr.

Rupee appreciated 12 paise to end at 66.48/$.

OUTLOOK

Today morning Nikkei is down more than a percent and half as the yen has strengthened to around 100.20 against the dollar. Other Asian markets are trading with cuts of upto half a percent and SGX Nifty is suggesting a marginally lower start for our market.

Readers would recall that after Nifty broke the immediate support of 8790 on Monday, we had been working with the downside target of 8690, which was the bottom made in mid-September.

The benchmark touched exactly that level yesterday before closing at 8706, achieving the target mentioned above and vindicating our view.

8690 is the important support to eye, a close below which would confirm a lower-top lower-bottom formation on the daily chart. 8540, the bottom made towards the End of August, would be the next support to eye if that happens.

Immediate resistance on the hourly chart has moved to 8800, at least a crossover of which is required to bring bulls back in the game.

Traders would do well to wait for the breach of 8690 for taking a fresh bearish view.