11250 CONTINUES TO BE IMMEDIATE HURDLE; 10866-10750 CONTINUES TO BE IMPORTANT SUPPORT ZONE

11250 CONTINUES TO BE IMMEDIATE HURDLE; 10866-10750 CONTINUES TO BE IMPORTANT SUPPORT ZONE

WORLD MARKETS

US indices fell 0.2%-0.4% on the back of U.S. Federal Reserve Chairman Jerome Powell's comments on inflation after the central bank decided to increase interest rates.

Fed raised its target overnight rate by 25 bps to a range of 2%-2.25%, marking the third hike this year, as was widely expected. The central bank dropped the word "accommodative" from its statement in how it describes its monetary policy. Later, Powell told reporters that the Fed did not see inflation surprising to the upside noting: "It's not in our forecasts."

The comment sent rates lower, along with bank stocks. The 10-year Treasury note yield fell to 3.06%.

Earlier, Fed upped outlook for U.S. economic growth this year from 2.8% to 3.1% and for next year from 2.4% to 2.5%.

US crude fell 1% to $71.57 a barrel and Brent fell 39 cents to $81.48 after U.S. data showed a surprise build in domestic crude inventories.

European markets ended little changed, except 0.6% higher DAX.

AT HOME

After gaining more than half a percent in the opening trade, Sensex and Nifty indices gave away all the gains and more through the session to end lower by 0.3% and 0.1% respectively. Sensex settled at 36542, down 110 points while Nifty lost 14 points to finish at 11053. BSE mid-cap and small-cap indices however gained 0.4% and 0.1% respectively. BSE IT index fell 1.6%, becoming top loser among the sectoral indices, followed by 1.4% lower FMCG and Teck indices. Metal and Realty indices were the top gainers, up 1.7% each.

FIIs net sold stocks worth Rs 810 cr but net bought index futures and stock futures worth Rs 279 cr and 707 cr respectively. DIIs were net buyers to the tune of Rs 1555 cr.

Rupee appreciated 9 paise to end at 72.60/$.

The government has hiked import duty on high-end consumer items including washing machines, air conditioner, footwear, radial car tyre, diamonds, jet fuel as a part of its plan to reduce current account deficit (CAD) and stabilise rupee.

The Union Cabinet also approved the new telecom policy. The telecom policy is focused on increasing high-speed broadband penetration with use of modern technologies like 5G and optical fibres across the country at affordable rates.  Further, the policy also aims to rationalize the spectrum charges. The telecom sector is reeling under a huge debt with interest coverage ratios of some of the telcos such as Bharti Airtel falling below one and rationalizing of spectrum charges could possibly help the telecom operators to keep their debt under check and will help them to participate in the auctions.

Further, the government approved a Rs 45 billion package for the sugar industry. The Cabinet Committee on Economic Affairs (CCEA) approved the food ministry's proposal that seeks to address the surplus domestic stock of sugar and help mills in clearing huge cane arrears of around Rs 130 billion. This is the second financial package to bail out the sugar industry after Rs 85 billion package announced in June.

OUTLOOK

Today morning, Nikkei is up 0.1% while Hang Seng and Shanghai are down 0.3% each. SGX Nifty is suggesting about 20 points higher start for our market.

After rebounding from the vicinity of 10866 bottom made last week on Tuesday, yesterday was a day of consolidation as Nifty, after touching a high of 11145 at the open, eased to end 14 points lower at 11053.

As we have been mentioning, 10866-10750 continues to be important support zone to eye. Also, 11250 continues to be immediate hurdle, a crossover of which is required for a fresh upmove.