US INDICES NOSEDIVE ON RECESSION, TRADE CONCERNS; 10750-10960 CONTINUES TO BE IMMEDIATE RANGE FOR NIFTY

US INDICES NOSEDIVE ON RECESSION, TRADE CONCERNS; 10750-10960 CONTINUES TO BE IMMEDIATE RANGE FOR NIFTY

WORLD MARKETS

US indices nosedived 3.1%-3.8% on concerns over a potential economic slowdown and lingering worries around U.S.-China trade.

The yield on the three-year Treasury note surpassed five-year yield on Monday. When a so-called yield curve inversion happens — short-term yields trading above longer-term rates — a recession could follow, though it is often years away after the signal triggers.

Uncertainty surrounding the details of the agreement struck between U.S. President Trump and Chinese President Xi Jinping in Argentina also weighed on sentiment. Discrepancies over when that truce would begin has led to confusion, with conflicting messages coming from within the White House as well as differing opinions from Trump, Washington and Beijing over the actual details of the agreement.

Meanwhile, Trump made clear through series of tweets that he would revert to tariffs on China if the two sides could not resolve their differences.

US crude rose 30 cents to $53.25 a barrel and Brent rose 39 cents to $62.08.

European markets fell 0.6%-1.4%.

AT HOME

Sensex and Nifty ended lower by 0.3% and 0.1% respectively, breaking six-day upmove. Sensex lost 106 points to settle at 36134 while Nifty finished at 10869, down 14 points. BSE mid-cap index fell 0.1% but small-cap index rose 0.1%. BSE IT and Teck indices climbed 1.7% and 1.4% respectively, becoming top gainers among the sectoral indices while FMCG, Telecom, Realty and Consumer Durable indices fell 0.6% each, becoming top losers.

FIIs net sold stocks and stock futures worth Rs 56 cr and 399 cr respectively but net bought index futures worth Rs 37 cr. DIIs were net sellers to the tune of Rs 521 cr.

Rupee depreciated 4 paise to end at 70.49/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.8%-1.7% and SGX Nifty is suggesting about 50 points lower start for our market.

In yesterday's report we had reiterated the view that 20-week moving average, placed around 10960, is the immediate hurdle, a crossover of which is required for a fresh upmove. We had also said that 200-DMA, placed around 10750, is the immediate support, with the stop-loss of which, existing longs can be held on to.

Nifty yesterday closed at 10869 and is set to open near 10800 today.

10750 continues to immediate support, upon breach of which 10660, where 20-DMA as sell as a trendline adjoining recent bottoms on the daily chart is palced, would be the next support to eye. 10960 continues to be immediate hurdle.

Key event to watch out today would be the monetary policy decision by monetary policy committee. While repo rate is widely expected to be unchanged at 6.5%, lower inflation and slower growth could change the tone.

U.S. stock market will be closed today out of respect for former President George H.W. Bush's funeral.