NIFTY RETREATS FROM 11800-11850 RESISTANCE ZONE; 11600 IS THE IMMEDIATE SUPPORT

NIFTY RETREATS FROM 11800-11850 RESISTANCE ZONE; 11600 IS THE IMMEDIATE SUPPORT

WORLD MARKETS

US indices rose 0.2%-0.4%  after the Federal Reserve opened the door for looser monetary policy in the near future.

The Fed kept interest rates unchanged as was widely expected. It, however, dropped the word “patient ” from its statement and said it would “act as appropriate” to sustain the economy. The Fed’s rate projections showed that eight Fed members see a cut this year, which markets took as a further sign the central bank was close to cutting rates. Its median forecast, however, still reflected no cuts this year, but additional easing in 2020. Fed Chair Jerome Powell also said that some Fed officials believed the case for easier monetary policy had strengthened.

Treasury yields fell following the announcement, with the benchmark 10-year yield at 2.02%.

WTI crude fell 14 cents to $53.67 a barrel while Brent eased 29 cents to $61.85.

In Europe, FTSE and DAX fell 0.5% and 0.2% respectively while CAC was up 0.2%. UK consumer prices rose to an annual rate of 2% in May, matching expectations.

AT HOME

It was nothing less than a roller-coaster ride as benchmark indices, after rising nearly a percent in the initial trade, plunged a percent and half from the top and then rebounded sharply in last half an hour to end flat to modestly higher. Sensex settled at 39112, up 66 points while Nifty ended flat at 11691. BSE mid-cap and small-cap indices however fell 0.7% and 1.4% respectively to close at one-month low. BSE Realty and Consumer Durable indices gained 1.2% and 0.9% respectively, becoming top gainers among the sectoral indices while Healthcare index tumbled 1.3%, becoming top loser, followed by 1% lower Auto and Telecom indices.

FIIs net sold stocks and stock futures worth Rs 97 cr and 673 cr respectively but net bought index futures worth Rs 354 cr. DIIs were net sellers to the tune of Rs 105 cr.

Rupee appreciated 2 paise to end at 69.68/$.

OUTLOOK

Today morning, Shaghai is flat while Nikkei and Hang Seng are up about a fourht of a percent. SGX Nifty is suggesting about 40 points higher start for our market.

In yesterday's report we had mentioned that "11800 is the immediate hurdle on the hourly chart, which will be followed by 20-DMA placed around 11850, making 11800-11850 immediate resistance zone".

Nifty, after touching a high of 11802 in the initial trade, reversed to touch a low of 11625 before closing at 11691, vindicating our view. The benchmark is set to open near 11750 today.

11800-11860, where 11802 is the top made yesterday and 11860 is where 20-DMA is placed, continues to be immediate resistance zone.

On the way down, 11605-11591 is the supprt zone where 11605 is the 50% retracement level of the entire 11108-12103 upmove, and roughly coincides with 11591, the upper end of the gap created by big gap-up opening after the exit polls.