8690-8650 IS THE SUPPORT AREA; 8800 IS THE HURDLE

8690-8650 IS THE SUPPORT AREA; 8800 IS THE HURDLE

WORLD MARKETS                             

Dow and S & P 500 gained 0.1% each but Nasdaq lost 0.2% yesterday, digesting minutes of the September Fed meeting.

Federal Reserve's September minutes reaffirmed expectations for a possible December rate hike. The minutes also showed that the three Fed policymakers who were been in favor of a rate hike at the September meeting were concerned that the delay in raising rates might send the country into a recession.

Dollar strengthened for the third straight day with the dollar index rising to 97.97 from 97.55. Bond yields around the world rose, with the benchmark U.S. 10-year note yield near 1.78%, a four-month high, after the Fed minutes release. The 10-year German bund yield rose to 0.068%.

US oil fell 1.2% to settle at $50.18 a barrel after OPEC said in its latest report that oil production rose to its highest in at least eight years during September and American Petroleum Institute data that showed a U.S. crude inventory build for the first time in six weeks.

Key European markets fell between 0.4%-0.7%. The British pound steadied after a sharp decline Tuesday to trade about 0.75% higher near $1.2214 after U.K. Prime Minister Theresa May said she would provide lawmakers some scrutiny over the Brexit proceedings and that the country would seek "maximum possible access" to EU's single market.

Stocks fell sharply on Tuesday, with the three major U.S. indexes dropping more than 1 percent.

AT HOME

After rising more than half a percent in the initial trade, benchmark indices gave away most of the gains through the session to end just marginally higher on Monday. Sensex added 21 points to settle at 28082 while Nifty finished at 8709, up 11 points.  BSE small-cap index gained 0.25% but the mid-cap index lost 0.2%. BSE Consumer Durable and Metal indices climbed 1.7% and 1.5% respectively, becoming top gainers among the sectoral indices while Realty and Energy indices were the top losers, down 1.2% and 0.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 547 cr, 152 cr and 309 cr respectively. DIIs were net buyers to the tune of Rs 469 cr.

Rupee appreciated 14 paise to end at 66.53/$.

After shrinking 2.5% in July, industrial production, as measured by IIP, contracted yet again in August by 0.7%.

Indusind Bank reported 25.8% growth in September quarter net profit at Rs 704 cr. NII rose 33.5% to Rs 1460 cr. Net NPA ratio improved to 0.37% from 0.38% sequentially while gross NPA ratio was at 0.90% vs 0.91%.

OUTLOOK

Today morning Nikkei is up about half a percent on the back of weaker yen, Shanghai is flat, Hang Seng is down more than half a percent and SGX Nifty is trading around 8700, which is down about 40 points compared to Monday's close of Nifty futures.

In Monday's report we had mentioned that 8690-8650 is the immediate support area for Nifty where 8690 is the immediate support on the hourly chart while 8650 is the 61.8% retracement level of the 8555-8807 upmove.

After today's gap down opening, Nifty will be back in this support area. A breach of 8650 would open up the possibility of the retest of the 8555 bottom. On the way up, 8800 continues to be important hurdle to eye.

TCS will report its quarterly earnings after market hours today where dollar revenue is expected to rise 1.8% to USD 4440 mn while in rupee terms it may be up 1.5% at Rs 29738 cr. Constant currency growth is expected at 2.5%. Net profit might fall 0.9% to Rs 6260 cr. EBIT margin is expected at 25.3% as against 25.2% in the previous quarter. Also important would be company's guidance on long term margin target band of 26-28%, outlook on BFSI vertical and discretionary spending.

India's Consumer Price Inflation for September would be released today and is expected to fall to 4.53% from 5.05% in August.