9800, 9685 ARE DOWNSIDE SUPPORTS; 9940-10000 RESISTANCE ZONE

9800, 9685 ARE DOWNSIDE SUPPORTS; 9940-10000 RESISTANCE ZONE

WORLD MARKETS                             

Dow and S & P 500 fell 0.2% each while Nasdaq tumbled 0.9% as the war of words between North Korea and the U.S. escalated.

North Korea's foreign minister said U.S. President Donald Trump's latest comments amounted to declaring war on North Korea and that it has the right to shoot down strategic U.S. bombers even if they are not in North Korean airspace. Later, White House press secretary said "we have not declared war on North Korea," calling the suggestion "absurd."

Gold jumped and treasury yields fell on safe haven buying.

Brent crude surged 3.8% to $59.02 a barrel, its highest level since mid-2015. WTI crude added 3% to settle at $52.22.

European markets, except a flat DAX, fell 0.1%-0.9% with Spain and Italy leading the losses. Euro retreated following the German election on Sunday where provisional results showed German Chancellor Angela Merkel's party had the most votes but support for a far-right party was also larger than expected and she will likely face a tough coalition negotiation.

Earlier, Japanese Prime Minister Shinzo Abe said he would be dissolving the lower house of parliament on Sept. 28 ahead of a snap election expected on Oct. 22.

AT HOME

Benchmark indices plunged nine tenth of a percent, extending the losing streak to fifth straight and closing at the lowest level since 29th August. Sensex settled at 31627, down 296 points while Nifty lost 92 points to finish at 9873. BSE mid-cap and small-cap indices nosedived 1.1% and 2% respectively. All the BSE sectoral indices ended in red with Realty and index leading the losses, down 3.5%, followed by 2% lower Basic Material index.

FIIs net sold stocks, index futures and stock futures worth Rs 1249 cr, 722 cr and 238 cr respectively. DIIs were net buyers to the tune of Rs 1010 cr.

Rupee tumbled 32 paise to end at fresh six month low of 65.12/$.

Prime Minister Narendra Modi yesterday constituted a new Economic Advisory Council, which will seek to address the nation's macroeconomic issues.

He also launched a Rs 16,000-crore scheme, Pradhan Mantri Sahaj Bijli Har Ghar Yojana (shortened to Saubhagya) that he said will deliver free electricity connections by December 2018. However, they will have to pay the monthly power bill.

OUTLOOK

Today morning, Asian markets are trading with cuts of upto 0.7% and SGX Nifty is suggesting about 20 points lower start for our market.

After Nifty achieved downside target of 9950 on Friday, we had said that upon breach of 9950, 9874, the 61.8% retracement level of the 9685-10180 upmove, would be the next immediate support and below 9875, the possibility of retesting of 9685, the bottom made in August, would open up.

Yesterday, Nifty broke 9950 support and plunged all the way to 9816 before closing at 9873.

While 9685 continues to be crucial support, 20-week moving average, placed around 9800, is the next immediate support to eye. 

On the way up, 20 and 34-DMAs are placed around 9940 and 10000 respectively, making 9940-10000 an immediate resistance zone.