CRUCIAL SUPPORT LEVELS ON TEST

CRUCIAL SUPPORT LEVELS ON TEST

WORLD MARKETS                             

US indices nosedived 0.9%-2.1% as tensions between the United States and North Korea persisted.

After previously warning of "fire and fury" if North Korea persisted in threatening the U.S., Trump yesterday said his statement "wasn't tough enough." While he did not comment on what he meant by that statement, Trump said that North Korea should be "very, very nervous" if it "(did) anything in terms of even thinking about an attack."

Gold jumped more than a percent to its highest levels in more than two months on safe haven demand.

Dollar slipped on the back of weaker-than-expected U.S. producer prices.

Brent crude fell 1.5% to $51.90 a barrel and U.S. crude declined 2% to $48.59.

European markets tumbled 0.6%-1.4%. U.K.'s trade deficit rose in June due to a fall in exports. In France, industrial output contracted 1.1% on a monthly basis in June.

AT HOME

After plunging a percent and third, benchmark indices recouped some of the losses in last half an hour to end lower by nine tenth of a percent, extending the losing streak to fourth consecutive day and closing at one-month low. Sensex settled at 31531, down 267 points while Nifty lost 88 points to finish at 9820. BSE mid-cap and small-cap indices nosedived 2.6% and 2.9% respectively. Except a 0.6% and 0.1% higher IT and Teck indices respectively, all the BSE sectoral indices ended in red with Realty index leading the tally, down 5.1%, followed by 3.2% lower Healthcare index.

FIIs net sold stocks worth Rs 1171 cr but net bought index futures and stock futures worth Rs 471 cr and 359 cr respectively. DIIs were net buyers to the tune of Rs 822 cr.

Rupee depreciated 25 paise to end at 64.08/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.6%-1.4% and SGX Nifty is suggesting about 100 points lower start for our market.

Nifty yesterday plunged all the way to 9776 before closing at 9820, achieving the 34-DMA target of 9840 and testing the 50-DMA placed around 9775.

A gap down opening today would take Nifty close to 9710, which is the 61.8% retracement level of the 9450-10140 upmove seen since June end. In the event of 9710 also not holding, one will have to be prepared for the retest of 9450 bottom.

9890, the top made yesterday, can now be considered immediate hurdle, with the stop-loss of which, existing shorts can be held on to.

                                                   

From the larger perspective, Nifty has never closed below the 50-DMA ever since the rally began in late December 2016. Currently 50-DMA is placed around 9775 and a close below it would not be a good sign and would make the overall structure weak.

SBI, BoB, BPCL, Bosch, Cipla, Hindalco and Sun Pharma will report their quarterly earnings today.