NIFTY REBOUNDS AFTER ACHIEVING 9685 TARGET; VINDICATES OUR VIEW

NIFTY REBOUNDS AFTER ACHIEVING 9685 TARGET; VINDICATES OUR VIEW

WORLD MARKETS                             

While Nasdaq ended flat, Dow and S & P 500 gained 0.2% and 0.1% respectively, digesting prospects for U.S. tax reform. The small-cap Russell 2000 index hit an all-time high.

The GOP tax plan released Wednesday breaks rates down into three categories and cuts corporate tax rates. The plan also seeks to give companies a break for profits stashed overseas while doubling the standard deduction for most filers. Criticism, however, arose over how the plan was skewed toward the wealthy, while questions remained over how the tax cuts would be funded.

Dollar index, after touching a high of 93.67, eased to end at 93.16. Treasury yields ease with the 2-year yield near 1.45% after hitting 1.499%. The 10-year yield traded near 2.31% after reaching 2.359%.

The final read on U.S. second-quarter gross domestic product showed a 3.1% increase. Weekly jobless claims rose slightly to 272,000.

U.S. crude fell 1.1% to $51.56.

Main European markets gained 0.1%-0.4% but Italy and Spain lost 0.2% and 0.4% respectively.

AT HOME

Benchmark indices ended higher by about a third of a percent after a roller coaster session, breaking a seven-day losing streak. Sensex settled at 31282, up 123 points while Nifty added 33 points to finish at 9769. BSE mid-cap and small-cap indices gained 0.8% and 0.9% respectively. BSE Realty and Finance indices rose 0.9% each, becoming top gainers among the sectoral indices while Energy index was the top loser, down 0.5%, followed by 0.3% lower Consumer Durable and Capital Goods indices.

FIIs net sold stocks, index futures and stock futures worth Rs 5328 cr, 2803 cr and 83 cr respectively. DIIs were net buyers to the tune of Rs 5197 cr.

Rupee appreciated 21 paise to end at 65.50/$.

The Centre kept the gross borrowing target for October-March unchanged at Rs 2.08 lakh crore but indicated that the government may raise more funds from the market if required. The net borrowing will continue to remain at Rs 1.92 lakh crore.

OUTLOOK

Today morning, except a 0.3% lower Nikkei, other Asian markets are trading with modest gains and SGX Nifty is suggesting about 15 points lower start for our market.

After Nifty broke the 34-DMA placed around 9940, we have been mentioning that 9685, the bottom made in August, is the major downside target as well as the crucial support to eye.

Yesterday, Nifty, after touching a low of 9687, recovered to end at 9768, achieving the target mentioned above and vindicating our view.

9685 continues to be important support a breach of which also break the higher-top higher-bottom formation on the weekly chart. 9500, where 34-week moving average is placed, would be the next major support if that happens.

9920, where 34-DMA is placed, continues to be immediate hurdle, a crossover of which is required for a fresh upmove.

Indian markets will remain shut on Monday for Gandhi Jayanti.