US EQUITIES EASE, GOLD TUMBLES ON STRONG DOLLAR; STAY LONG WITH THE STOP-LOSS OF 8690

US EQUITIES EASE, GOLD TUMBLES ON STRONG DOLLAR; STAY LONG WITH THE STOP-LOSS OF 8690

WORLD MARKETS                             

Dow and S & P 500 fell half a percent each while Nasdaq lost 0.2% yesterday on the back of stronger Dollar, data from IMF and comments from a Fed official.

Dollar index sored to 96.44 before closing at 96.14, a two-month high. Gold tumbled more than 3% to $1270 an ounce, closing at three-month low and posting its worst trading day since 2013.

IMF, in its "World Economic Outlook" said that Overall global growth is expected at 3.1% in 2016, unchanged from its July forecast. However growth of advanced economies, which include the United States, will slow this year to 1.6% as against 2.1% last year and a July IMF forecast of 1.8%. the growth in emerging markets (EMs) and developing economies is expected to strengthen marginally to 4.2 percent.

Richmond Fed President Jeffrey Lacker said there was a strong case to raise interest rates significantly and keep inflation under control.

Crude oil futures initially surged in the U.S. session on a American Petroleum Institute (API) report of declining domestic crude inventories, but settled just 0.25% higher at $48.69 per barrel on the back of the strong dollar. Brent finsihed down 2 cents at $50.87.

U.S. listed shares of Deutsche Bank rose more than 2%.

European markets rose 0.2%-1.3% with FTSE on the top. Sterling weakened sharply, hitting its lowest level since 1985 on fears of U.K.'s impending exit from the European Union.

AT HOME

Benchmark indices gained about a third of a percent, extending the winning streak to third straight day. Sensex added 91 points to settle at 28335 while Nifty finished at 8769, up 31 points. BSE mid-cap and small-cap indices rose 0.5% and 0.7% respectively. Except a 0.4% and 0.04% cut in Capital Goods and Consumer Discretionary indices respectively, all the BSE sectoral indices ended in green, with Oil & Gas and Telecom indices leading the tally, up 2.3% and 1.3% respectively.

FIIs net bought stocks and index futures worth Rs 344 cr and 347 cr respectively but net sold stock futures worth Rs 31 cr. DIIs were net sellers to the tune of Rs 172 cr.

Rupee appreciated 12 paise to end at 66.46/$.

The Reserve Bank of India cut repo rate by 25 basis points to 6.25%, as a newly set up panel felt that inflation levels were low enough to reduce loan rates. The six member panel, which brainstormed over two days, unanimously agreed that inflation was unlikely to gallop past the tolerance threshold of 6% in the near future. The MPC expects retail inflation rates to hover around 5% by March 2017, the RBI said in a statement, which is well within the comfort zone.

International Monetary Fund raised India’s growth forecast to 7.6% from 7.4% for 2016 and 2017.

OUTLOOK

Today morning, except a 0.4% higher Nikkei, which is cheering a weaker yen, other Asian markets are trading with modest cuts and SGX Nifty is suggesting a marginally lower start for our market.

In yesterday's report we had mentioned that "Upon crossover of 8745, next target to eye would be 8800, which was the top made last Thursday, when the announcement of "surgical strike" came. Above 8800, 8893 the top made on 22nd September, would be the bigger hurdle to eye."

The benchmark touched a high of 8784 before closing at 8769, moving closer to 8800 target.

8800 continues to be immediate target as well as hurdle to eye upon crossover of which 8893, as mentioned above, would be the next target to eye.

Immediate support on the hourly chart is palced around 8690, with the stop-loss of which trading longs should be held on to.