NIFTY REBOUNDS FROM OUR INDICATED 11000 SUPPORT; 11235 IS IMMEDIATE HURDLE

NIFTY REBOUNDS FROM OUR INDICATED 11000 SUPPORT; 11235 IS IMMEDIATE HURDLE

WORLD MARKETS

US indices nosedived 1.1%-1.2% as Federal Reserve Chairman Jerome Powell dampened hopes for further rate cuts later this year.

The Fed cut rates by 25 basis points in a widely expected move, citing “global developments” and “muted inflation” as reasons. But Fed Chair Powell dampened hopes of further rate cuts later this year by saying that Wednesday’s rate cut was “not the beginning of a long series of rate cuts.”

The dollar index hit its highest level in more than two years. The benchmark 10-year Treasury yield jumped above 2.07% before falling back to around 2.02%.

Apple rose 2% after quarterly numbers topped expectation and revenue guidance for the fourth quarter also came in better-than-expected.

Brent futures rose 45 cents to settle at $65.17 a barrel while WTI gained 53 cents to settle at $58.58.

In Europe, FTSE fell 0.8% while DAX and CAC rose 0.3% and 0.1% respectively. Data showed euro zone economic growth halved in the period from April to June and inflation slowed sharply in July, despite unemployment falling to its lowest in 11 years.

Earlier, official data showed Chinese factory activity contracting for the third straight month in July.

The United States and China wrapped up a round of trade talks on Wednesday and will resume negotiations in Washington in early September.

AT HOME

After falling about eight tenth of a percent in the morning trade, benchmark indices saw a sharp rebound in noon trade to end higher by about a fourth of a percent. Sensex settled at 37481, up 83 points while Nifty added 32 points to finish at 11118. BSE mid-cap and small-cap indices gained 0.7% and 0.3% respectively. BSE Metal and Basic Material indices climbed 2.4% and 1.4% respectively, becoming top gainers among the sectoral indices while Telecom index tumbled 1.6%, becoming top loser, followed by 0.5% lower Consumer Durable index.

FIIs net sold stocks and index futures worth Rs 1497 cr and 1145 cr respectively but net bought stock futures worth Rs 687 cr. DIIs were net buyers to the tune of Rs 2479 cr.

Rupee appreciated 7 paise to end at 68.79/$.

Core sector, comprising of eight key industries, grew at just 0.2% in June as against 4.3% growth in May.

India's April-June fiscal deficit stood at Rs 4.32 lk cr Vs 4.29 lk cr y-o-y.

Eicher Motor's number came in lower-than-expected. Revenue fell 6% y-o-y to Rs 2382 cr, EBITDA slipped 22.8% to Rs 614 cr, margin contracted 560 bps to 25.8% and profit fell 21.6% to Rs 452 cr.

For the month, Sensex and Nifty fell 4.8% and 5.7% respectively.

OUTLOOK

Today morning, Asian markets are trading with modest cuts and SGX Nifty is suggesting about 50 points lower start for our market.

In yesterday's report we had reiterated the view that 20-month moving average, placed around 11000, continues to be next important support to eye.

Nifty, after touching a low of 10999, rebounded sharply to end at 11118, vindicating our view. The benchmark is set to open below 11100 today.

11000, the low made yesterday, which also coincided with 20-month moving average, continues to be a crucial support. If this level gets breached, 10800 and 10700, the 61.8% and 67% retracement levels of the entire 10004-12103 upmove, would be next supports to eye.

Immediate hurdle on the hourly chart has moved lower to 11235, a crossover of which is required to generate a "Buy" on the hourly chart. Trading shorts can be held with the stop-loss of the same.

Bharti Airtel will report its quarterly earnings today.