NIFTY REVERSES AFTER NEARLY ACHIEVING 10638 TARGET

NIFTY REVERSES AFTER NEARLY ACHIEVING 10638 TARGET

WORLD MARKETS

US indices tumbled 1.2% each yesterday after comments from new Federal Reserve Chair Jerome Powell sent rates higher.

In his testimony before Congress, Powell indicated that the central bank raising interest rates more than three times was a possibility as inflation moves "up to target."

U.S. Treasury yields rose on the back of these remarks, with the benchmark 10-year Treasury note adding 5 basis points to hit 2.915%. Dollar index surged nearly 1.5% to 90.36.

In economic data, U.S. home prices rose 6.3% compared to December of 2016, according to the S&P CoreLogic Case-Shiller national home prices index. U.S. consumer confidence topped 130.8 in February, a 17-year high.

Oil fell on stronger dollar with WTI down 1.3% or 90 cents to $63.01 and Brent down 87 cents to $66.63 a barrel.

European markets, except 0.1% higher Italy, ended with modest cuts

AT HOME

After opening with gains of about half a percent, benchmark indices reversed to end with cuts of three tenth of a percent. Sensex settled at 34346, down 99 points while Nifty lost 28 points to finish at 10554. BSE mid-cap and small-cap indices fell 0.5% and 0.4% respectively. BSE Realty index and Bankex tumbled 2% and 1.4% respectively, becoming top losers among sectoral indices while Telecom and Energy indices were the top gainers, up 1% and 0.5% respectively.

FIIs net sold stocks worth Rs 907 cr but net bought index futures and stock futures worth Rs 783 cr and 428 cr respectively. DIIs were net buyers to the tune of Rs 1047 cr.

Rupee depreciated 9 paise to end at 64.89/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.2%-1.3% with Shanghai leading the losses and SGX Nifty is suggesting about 60 points lower start for our market.

After Nifty crossed the immediate 10500 hurdle, we were working with major target of 10638, the top made on 8th February. Nifty yesterday touched a high of 10632, nearly achieving this target and reversed from there to end at 10554.

A gap-down opening today would take it closer to 10500, which is the immediate support as the gap, created by the gap-up opening on Monday, is placed there. Upon sustained trading below 10500, 40410, the 67% retracement level of the recent 10302-10632 upmove, would be the next support to eye.

We had advised booking some profit in long positions around 10638 hurdle. Remaining positions can be closed if the low made during first hour is taken out subsequently.

India's Q3 GDP data will be released today and is expected to show a growth of 6.82% and  up from 6.3% growth registered in Q2 and 7% in last year same quarter.