NIFTY ACHIEVES 10782 TARGET; STAY SHORT WITH THE STOP-LOSS OF 10900

NIFTY ACHIEVES 10782 TARGET; STAY SHORT WITH THE STOP-LOSS OF 10900

WORLD MARKETS

Dow gained 0.2%, S & P 500 ended marginally in the red and Nasdaq lost 0.4%  an important speech from U.S. Federal Reserve Chairman Jerome Powell.

Powell is set to deliver a speech at a yearly central banking symposium in Jackson Hole, Wyoming. Markets will look for clues about what the U.S. central bank would do next.

Meanwhile, the benchmark 10-year Treasury yield briefly fell back below its 2-year counterpart once again yesterday.

IHS Markit said manufacturing activity in the U.S. contracted this month for the first time in nearly 10 years, adding to recession worries.

Meanwhile, Kansas City Fed President said the Fed should not have cut interest rates last month, stating that “it wasn’t required in my view. ”  Philadelphia Fed President said he does not see the need for another rate cut, noting the central bank should keep rates at this level “for a while. ”

WTI crude fell 33 cents to $55.35 per barrel while Brent crude lost 39 cents to $59.91.

European markets lost 0.1%-1%. Minutes of latest ECB meeting showed policymakers suggesting that a combination of measures may be needed to prop up the euro zone economy, with recent indicators painting a bleak picture of the outlook.

Euro zone composite PMI climbed in August to 51.8 from 51.5 in July, exceeding expectations. France’s composite PMI rose to 52.7 points from 51.9 in July and Germany’s composite came in at 51.4, also beating forecasts.

AT HOME

Benchmark indices plunged 1.6% each, with Sensex and Nifty closing at the lowest level since 5th March and 20 February respectively. Sensex lost 587 points to settle at 36472 while Nifty finished at 10741, down 177 points. BSE mid-cap and small-cap indices fell 1.4% and 2.2% respctively to close at the lowest level since 31st January 2017 and 30th December 2016 respectively. Except a 0.3% higher IT index and flat Teck index, all the BSE sectoral indices ended in red with Realty index losing the most, down 6%, followed by 3.5% lower Metal index.

FIIs net sold stocks, index futures and stock futures worth Rs 903 cr, 244 cr and 125 cr respectively. DIIs were net buyers to the tune of Rs 1719 cr.

Rupee depreciated 25 paise to end at 71.81/$.

OUTLOOK

Today morning, Asian markets are trading mixed with modest changes and SGX nifty is suggesting about 20 points lower start for our market.

In yesterday's report we had reiterated the view that 10901 continues to be immediate support upon breach of which, 10782, the low made on 5th August, would be the next support to eye.

Nifty broke 10901 support in the initial trade itself and plunged all the way to 10718 before closing at 10741.

10700, the 67% retracement level of the entire 10004-12103 upmove, is the next downside target/support to eye. If that gives way, 34-month moving average, placed around 10375, would be the next crucial support to eye.

10900, the erstwhile support, would now act as immediate hurdle, with the stop-loss of which, trading shorts can be held on to.