8460, 8883 ARE HURDLES; 7500, 7350 SUPPORTS

8460, 8883 ARE HURDLES; 7500, 7350 SUPPORTS

WORLD MARKETS

Dow and S & P 500 tumbled 3% each while Nasdaq fell 0.3%  as Senate failed for the second time to clear a bill that would authorize giant fiscal spending to stimulate the economy.

Markets had opened higher after the Federal Reserve announced an open-ended asset purchase program. The central bank said the program will run in the “amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”

WTI gained 3.23% to settle at $23.36 per barrel while Brent crude rose 0.6% to $27.18 per barrel.

European markets fell 1.1%-3.8%.

AT HOME

Friday's rebound proved deceptive as Sensex and Nifty collapsed 13% each, marking biggest single-day fall ever, and closing at the lowest level in 39 months and 4 years respectively. Sensex settled at 25981, down 3934 points while Nifty lost 1135 points to finish at 7610. Nifty mid-cap and small-cap indices too tumbled 13% each to close at the lowest level in 5.5 years and 6 years respectively. All the BSE sectoral indices ended in red with Bankex and Finance indices leading the losses, down 16.8% and 16.1% respectively.

FIIs net sold stocks and stock futures worth Rs 2989 cr and 793 cr respectively but net bought index futures worth Rs 737 cr. DIIs were net buyers to the tune of Rs 1082 cr.

Rupee tumbled 112 paise to close at 76.30/$.

OUTLOOK

Today morning, Asian markets are trading with gains of 2%-6%, US futures are up nearly 3% and SGX Nifty is suggesting about 350 points higher start for our market.

In yesterday's report we had said that 7832, the bottom made last week, was the important immediate support, below which, 7500-7340 would be next support zone.

Nifty broke 7832 support and plunged all the way to 7583 before closing at 7610 and is set to open above 7900 today.

7500-7340 continues to be next support zone as 7500 is where a trendline adjoining bottoms made in October 2012 and August 2013 is placed while 7340 is the 50% retracement level of the entire 2252-12430 upmove seen after 2008.

Immediate hurdle on the hourly chart has moved lower to 8460, upon crossover of which, 8883, the top made on Friday, would be the next resistance to eye.