10866-10750 IS THE CRUCIAL SUPPORT ZONE; 11350 IMMEDIATE HURDLE

10866-10750 IS THE CRUCIAL SUPPORT ZONE; 11350 IMMEDIATE HURDLE

WORLD MARKETS

Dow gained 0.3%, S & P 500 ended flat while Nasdaq fell half a percent on Friday

US crude rose 46 cents to $70.78 ahead of a meeting of OPEC and other large crude exporters.

European markets gained 0.7%-1.7% with FTSE on the top. Following an informal summit in Austria, British leader said that the U.K. and EU were at an "impasse" in Brexit discussions. Streling plunged 1.3% against the dollar following the news.

Wall Street Journal reported that China had called off planned trade talks with the U.S. in the wake of a new round of duties.

For the week, Dow soared 2.2%, S & P 500 gained 0.8% but Nasdaq fell 0.3%. In Europe, FTSE and DAX soared 2.5% each and CAC was up 2.6%. In Asia, Shanghai took the lead with 4.3% gain, followed by 3.4% higher Nikkei and 2.4% up Hang Seng.

The markets in Japan, South Korea and China are closed for public holidays on Monday. The U.S.-China trade war remains in focus, with tariffs from both parties due to go into effect at 12.01 p.m. HK/SIN today.

AT HOME

It was a manic Friday as after gaining nearly a percent in first hour, benchmark indices nosedived about 4% from top of the day, only to rebound sharply to end lower by just eight tenth of a percent. Sensex settled at 36841, down 280 points while Nifty lost 91 points to finish at 11143. BSE mid-cap and small-cap indices plunged 1.7% and 3% respectively. Except 1.5% higher Oil & Gas index, all the BSE sectoral indices ended in red with Realty index and Bankex leading the losses, down 3.5% and 3.1% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 761 cr, 1564 cr and 616 cr respectively. DIIs were net buyers to the tune of Rs 497 cr.

Rupee appreciated 18 paise to end at 72.20/$.

Shares of Yes Bank fell 29% after RBI denied a three-year extension to CEO Rana Kapoor and asked him to step down after 31 January 2019.

Shares of NBFCs, led by DHFL, plunged sharply in on concerns over rising cost of borrowing for these companies amid continuing financial crisis at IL&FS. Management of DHFL however clarified that it is not facing in liquidity issue.

SEBI and RBI said over the weekend that they are watching the situation closely and are ready to take appropriate action if necessary. Also RBI will meet shareholders of IL&FS on 28th September.

OUTLOOK

Today, the markets in Japan, South Korea and China are closed for public holidays, Hang Seng is down more than a percent and SGX Nifty is suggesting about 20 points lower start for our market.

Readers would recall that after 11380 support was taken out, we had given downside target of 11160, which was the 50% retracement level of the 10560-11760 upmove.

However, in Friday's turmoil Nifty plunged all the way to 10866, from where it rebounded sharply to end at 11143.

10866, the bottom made on Friday, coincides with the trendline adjoining bottoms made in December 2016 and March 2018. It is also very close to 34-week moving average placed around 10800 and 200-DMA placed at 10750. This makes 10866-10750 a crucial support zone.

On the way up, 11350, the top made on Friday, would act as immediate hurdle above which 20-DMA, placed around 11500, would be the next major resistance.