NIFTY BREAKS 8500 SUPPORT; STAY SHORT WITH THE STOP-LOSS OF 8590

NIFTY BREAKS 8500 SUPPORT; STAY SHORT WITH THE STOP-LOSS OF 8590

WORLD MARKETS                             

US indices fell 0.2%-0.9% yesterday with information technology and Healthcare leading decliners, as concerns over the presidential election lingered and oil extended decline. This was the eighth straight day of losses for the S & P 500.

Initial jobless claims came in at 265,000, above a consensus estimate of 258,000. Preliminary read on third-quarter productivity showed an increase of 3.1%, well above the expected rise of 2%. The ISM non-manufacturing index for October came in below expectations. Factory orders rose for a third straight month.

US crude fell 1.5% to $44.66, extending the losing streak to fifth straight day.

Dollar index eased to 97.20 from 97.37.

European markets ended with cuts of upto 0.8%. The British pound shot up more than 1% against the dollar after the Bank of England raised its GDP and inflation forecasts and British High Court ruled that parliament would have to approve the invocation of Article 50, which would trigger the Brexit process.

AT HOME

After gaining about three tenth of a percent, benchmark indices plunged around six tenth of a percent from the top of the day to end lower by a third of a percent with Sensex and Nifty closing at the lowest level since 8th July and 21st July respectively. Sensex lost 97 points to settle at 27430 while Nifty finished at 8485, down 29 points. BSE mid-cap and small-cap indices lost 1.4% and 1% respectively. Except a 0.6% and 0.1% higher Telecom and FMCG indices respectively, all the BSE sectoral indices ended in red with Oil & Gas and Realty indices leading the tally, down 1.8% and 1.3% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 707 cr, 416 cr and 339 cr respectively. DIIs were net buyers to the tune of Rs 535 cr

Rupee depreciated 3 paise to end at 66.74/$.

Yesterday marked a big step towards rolling out a unified goods and services tax (GST) with the Centre and states agreeing on a four-slab structure –5, 12, 18 and 28 percent—along with a cess on luxury and `sin’ goods such as tobacco products and luxury cars. This is slightly different from what the Centre had proposed last month. The Centre had proposed a four-tired rate system–6, 12, 18 and 26 percent—along with a 4% levy on gold. Around 50% of the items in the retail inflation basket, primarily food items, will be kept out of GST and there will be a zero tax on such items.  A lower tax slab of 5% is proposed for those essential commodities on which no excise duty is levied at present by the centre but a 5% value-added tax is levied by the states. There will two standard rates of 12% and 18% that will be applicable to a majority of the taxable goods.

India's Nikkei/Markit Services PMI jumped to 54.5 in October from 52 in September. The composite PMI improved to 55.4 from 52.4.

Ambuja Cements   disappointed with its quarterly earnings. Profit increased 79% y-o-y to Rs 277 crore, mainly on account of dividend income of Rs 103 crore from ACC (post amalgamation of Holcim lndia with the company). Revenue declined 3.8% to Rs 2,031 crore, impacted by lower sales volume. EBITDA fell 2.3% to Rs 303 crore and margin expanded only by 20 basis points to 14.9% against estimates of Rs 375 crore and 17.9%, respectively. EBITDA per tonnne too was lower than estimates, stood at Rs 616 for the quarter against Rs 611 in same period last year and estimates of Rs 795.

OUTLOOK

Today morning, Nikkei, after yesterday' break, has opened more than a percent and half lower. Hang Seng and Shanghai are trading with modest gains and SGX Nifty is suggesting about 25 points lower start for our market.

Nifty yesterday closed at 8485, decisively breaking the important 8500 support which has been the floor for almost three months. Next meaningful support, as we have been mentioning, comes only around 8300, where 34-week moving average as well as the top made in June 2016, are placed.

Immediate resistance on the hourly chart is placed around 8590, with the stop-loss of which short positions should be held on to.

Key data to watch out today would be the US non-farm payroll data for October where addition of 175,000 jobs is expected.