NIFTY SET TO ACHIEVE 34-DMA TARGET; TRAIL STOP-LOSS TO 11320

NIFTY SET TO ACHIEVE 34-DMA TARGET; TRAIL STOP-LOSS TO 11320

WORLD MARKETS

US indices plunged 1.2%-1.7% as optimism around the upcoming U.S.-China trade talks faded.

The U.S. expanded its trade blacklist to include some of China’s top artificial intelligence firms on Monday, punishing Beijing for its treatment of predominantly Muslim ethnic minorities. China’s foreign ministry said to “stay tuned” for retaliation following the blacklist expansion.

Earlier, the South China Morning Post reported China is toning down its expectations ahead of trade negotiations with the US. The report said Chinese Vice Premier Liu He — who will lead the country’s trade delegation — will not carry the title of “special envoy,” signaling he has not received any specific instructions by President Xi Jinping.

Federal Reserve Chairman Jerome Powell said the central bank will expand its balance sheet “soon.” as a response to the recent funding issues the bond market faced in recent weeks.

On the data front, U.S. producer prices posted their biggest drop in eight months in September, dragged down by lower costs for goods and services.

Brent crude fell 45 cents, or 0.8%, to $57.90 a barrel and WTI eased 12 cents, or 0.2%, to $52.63.

European markets fell 0.8%-1.2%. The pound fell sharply against the dollar after several British media outlets reported that Brexit talks between the U.K. and European Union were close to breaking down. Data showed a surprise increase in German industrial output for August which rose by 0.3% on the month against expectations of a 0.1% fall.

AT HOME

After gaining about half a percent at the open, benchmark indices nosedived a percent from the top of the day to end lower by four tenth of a percent, extending the losing streak to sixth straight day. Sensex settled at 37532, down 141 points while Nifty lost 48 points to finish at 11126. BSE mid-cap and small-cap indices fell 0.24% and 0.8% respectively. Healthcare and Oil & Gas indices were the top losers among the BSE sectoral indices, down 2.4% and 1.8% respectively while Consumer Durables and Telecom indices were the top gainers, up  1% and 0.3% respectively.

FIIs net sold stocks worth Rs 494 cr but net bought index futures and stock futures worth Rs 611 cr and 385 cr respectively. DIIs were net buyers to the tune of Rs 905 cr.

Rupee depreciated 14 paise to end at 71.02/$.

OUTLOOK

Today morning, Asian markets are trading with cuts of 0.6%-0.9% and SGX Nifty is trading around 11120, suggesting about 40 points lower start for our market when compared to Monday's close of Nifty future.

At the risk of repeating, we have been negative on Nifty since 11381 support was broken on 1st October and have been advising holding on to short positions with a trailing stop-loss.

After 200-DMA support of 11250 was breached we had given next target of 11090, where 34-DMA was placed. Nifty, on Monday, plunged to a low of 11112 before closing at 11126 and is set to open below 11000.

34-DMA, placed around 11090 continues to be immediate support. If that does not hold, 11008, the 67% retracement level of the entire 10670-11695 upmove, would be the next important support to eye.

Meanwhile, immediate hurdle on the hourly chart has moved lower to 11320, with the stop-loss of which, trading shorts can be held on to.