LESS DOVISH FED SPARKS SELL-OFF ON WALL STREET; TRAIL STOP-LOSS TO 10850

LESS DOVISH FED SPARKS SELL-OFF ON WALL STREET; TRAIL STOP-LOSS TO 10850

WORLD MARKETS

Dow and S & P 500 fell 1.5% each while Nasdaq tumbled 2.2% to hit fresh 2018 lows after digesting interest rate hike and comments from the Federal Reserve.

Fed raised its benchmark interest rate by a quarter point to a target range between 2.25 to 2.5%, in a widely anticipated move. The move marked the fourth increase this year and the ninth since Fed began normalizing rates in December 2015. The Fed did however trim its 2019 outlook for rate hikes to just two increases from three previously.

However, the language in the post-meeting statement was also not entirely dovish, or easy on its outlook for rates. The committee continued to include a statement that more rate hikes would be appropriate, though it did soften the tone a bit. Markets took a leg lower during Powell's comments that the central bank would continue to reduce the size of its balance sheet at the current pace.

The benchmark 10-year Treasury note yield hit a fresh low of 2.798%, its lowest level since May 30. The 30-year Treasury bond broke below 3%.

US oil rose 96 cents or 2.1% to $47.20 after U.S. data showed strong demand for refined products.  Brent crude oil settled 98 cents, or 1.7%, higher at $57.24 a barrel.

European markets gained 0.2%-1.6% after Italy and the European Union reached a breakthrough on former's 2019 budget plans. Britain's inflation rate fell to a 20-month low in November.

AT HOME

Sensex and Nifty gained 0.4% and 0.5% respectively, extending the winning streak to seventh straight day. Sensex settled at 36484, up 137 points while Nifty added 58 points to finish at 10967. BSE mid-cap and small-cap indices climbed 1.5% and 1.1% respectively. Except 1.1% and 0.7% lower IT and Teck indices respectively, all the BSE sectoral indices ended in green with Realty index leading the tally, up 3.1%, followed by 1.9% higher Telecom index.

FIIs net bought stocks and index futures worth Rs 1209 cr and 502 cr respectively but net sold stock futures worth Rs 71 cr. DIIs were net sellers to the tune of Rs 481 cr.

Rupee appreciated 4 paise to end at 70.40/$.

OUTLOOK

Today morning, Nikkei is down 0.9% while Hang Seng and Shanghai are off a fourth of a percent each. SGX Nifty is suggesting about 90 points lower start for our market.

After Nifty achieved 10941 target, we had given next target of 11090, which is the 61.8% retracement level of the entire 11760-10004 fall.

Nifty, after touching a high of 10985, closed at 10967 but is set to open below 10900 today.

10850 is the immediate support, a breach of which will confirm a sell on the hourly chart and would pave the way for further fall.

10985, the top made yesterday, is now the immediate hurdle, upon crossover of which, 11090, as mentioned above, would be the next upside target to eye.

Traders are advised to keep stop-loss of 10850 in long positions.