8770 IS THE NEXT TARGET; 8600 IMMEDIATE SUPPORT

8770 IS THE NEXT TARGET; 8600 IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices gained 0.4%-0.8% yesterday helped by stronger-than-expected quarterly reports and after mixed inflation data. Healthcare and Materials were the lead the gains.

Earnings from Goldman Sachs, Johnson & Johnson, Netflix and UnitedHealth came in better-than-estimates.

Consumer Price Index rose 0.3%, meeting expectations. However, core CPI rose just 0.1%, missing expectations.

US crude rose 0.7% to $50.29 per barrel. Gold gained $6 to $1263 an ounce.

European markets climbed 0.8%-2%. Mining stocks surged on the back of weaker dollar and a solid uptick in metal prices. British Pound rose approximately 1% against the greenback following stronger-than-expected U.K. inflation data and reports that parliament may need to ratify any deal to exit the European Union, helping to ease concerns of a "hard Brexit."

AT HOME

After a positive start, benchmark indices kept on moving higher through the session and ended with hefty gains of just under two percent, registering the biggest single day gain since 25th May. Sensex soared 521 points to settle at 28051 while Nifty finished at 8679, up 158 points.  BSE mid-cap and small-cap indices added 1.9% and 1.3% respectively. All the BSE sectoral indices closed in green with Finance Index and Bankex leading the tally, up 2.6% and 2.4% respectively.

FIIs net bought stocks and stock futures worth Rs 345 cr and 1223 cr respectively but net sold index futures worth Rs 730 cr. DIIs were net buyers to the tune of Rs 173 cr.

Rupee appreciated 17 paise to end at 66.72/$.

Three day meeting of the GST Council began yesterday and agreed on a formula to compensate states in case of a revenue loss after moving to the new system. The council will now discuss the tax rates, the most contentious issue, today and tomorrow.

Minutes of the first Monetary Policy Committee meeting revealed that, the six-member body, headed by new RBI governor Urjit Patel, unanimously voted for a 25 basis point cut in RBI’s key lending rate—the repo rate—to 6.25%, arguing that large underutilised capacities and good summer rains will likely keep inflation low in the near future.

OUTLOOK

China's third-quarter GDP growth has come in at 6.7%, which is unchanged from previous quarter and in-line with estimates. September retail sales are up 10.7%, up from forecast and previous reading of 10.6%. However September industrial output growth has eased to 6.1% from previous reading of 6.3% and forecast of 6.4%.

Asian markets are trading flat to modestly higher and SGX Nifty is suggesting a marginally higher start for our market.

In yesterday's report we had mentioned that the 8506 bottom made on Monday roughly coincides with the 100-DMA placed around 8500 and a positive divergence was formed on the hourly chart which suggested that there was a possibility of some pullback. We had also said that 8630 is the immediate hurdle on the hourly chart.

Nifty yesterday soared 158 points to settle at 8679, crossing the 8630 hurdle decisively.

Next target/hurdle on the way up would be about 8770-8800 where 8770 is where the trendline adjoining major recent tops on the daily chart is placed while 8800 is the top made on the surgical strike day.

Immediate support on the hourly chat is placed around 8600, with the stop-loss of which, trading longs can be held on to.