NIFTY REBOUNDS FROM 10360-10310 SUPPORT ZONE; 10600 IS THE IMMEDIATE HURDLE

NIFTY REBOUNDS FROM 10360-10310 SUPPORT ZONE; 10600 IS THE IMMEDIATE HURDLE

WORLD MARKETS

After rising about a percent and half at the open, US indices gave away all the gains through the session to end mixed with modest changes amid fresh uncertainties surrounding U.S.-China trade relations and the possibility of a government shutdown in Washington.

The higher start was attributed the news that China is moving toward cutting tariffs on cars made in the U.S. to 15% from the current 40%. In addition, Chinese Vice Premier Liu He was reportedly in discussion with U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, with the aim of de-escalating a global trade war. Trump also tweeted the US administration was having "very productive conversations going on with China," adding: "Watch for some important announcements."

However, news reports that the U.S. will condemn China over hacking and economic espionage, dampened some of the initial optimism. Also weighing on the sentiment was the threat of government shutdown from Trump if more money was not allocated towards building a wall along the U.S.-Mexico border.

US crude rose 65 cents to $51.65 while Brent was up 23 cents at $60.20 a barrel.

European markets gained 1%-1.5%. On the data front, German economic sentiment improved slightly in December to -17.5 from -24.1 in November.

AT HOME

After opening with cuts of nearly percent and half, Benchmark indices soared about 2% from the bottom of the day to end higher by nearly half a percent. Sensex settled at 35150, up 190 points while Nifty added 60 points to finish at 10549. BSE mid-cap and small-cap indices climbed 1.5% each. Except 0.2% lower Oil & Gas index, all the BSE sectoral indices ended in green with Consumer Durable index leading the tally, up 2.6%, followed by 1.9% higher Healthcare index.

FIIs net sold stocks and index futures worth Rs 2421 cr and 636 cr respectively but net bought stock futures worth Rs 672 cr. DIIs were net buyers to the tune of Rs 2255 cr.

Rupee depreciated 51 paise to end at 71.85/$, the lowest level since November 16.

Congress put up a stellar show in the assembly elections held recently by winning 100 out of 200 seats in Rajathan, 68 out of 90 seats in Chhattisgarh and 114 out of 230 seats in Madhya Pradesh. TRS won 88 out of 119 seats in Telangana while in Mizoram, MNF won 26 out of 40 seats.

Government yesterday appointed Shaktikanta Das, member of the 15th Finance Commission and former Economic Affairs Secretary, as the new Reserve Bank of India (RBI) Governor.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.3%-1.6% with Nikkei on the top and SGX Nifty is suggesting a marginally higher start for our market.

In yesterday's report we had said that "10360 and 10310 are the 61.8% and 67% retracement levels of the entire 10004-10941 upmove, making 10360-10310 an important support zone".

Nifty, after touching a low of 10333, rebounded sharply to end at 10549, holding on to support zone mentioned above and vindicating our view.

10560-10600, the gap created by Monday's gap down opening, continues to be immediate hurdle, a sustained trading above which is required for fresh upmove. If that happens, 10710-10740, which are the 61.8% and 67% retracement levels of the recent 10940-10333 fall, would be the next resistance zone to eye.

India's November CPI will be out today and is expected to cool-off to 2.8% from 3.31% in October. October IIP will also be released today and is expected to show a growth of 5.7%, up from 4.5% in September.