16600 IS IMMEDIATE SUPPORT; 17100 IMMEDIATE HURDLE

 

16600 IS IMMEDIATE SUPPORT; 17100 IMMEDIATE HURDLE

 

WORLD MARKETS

 

US indices soared 2.8%-3.2% on hope that Fed will be able to slow inflation without triggering a recession as Fed Chair Powell indicated that the central bank won’t get even more aggressive in raising rates.

 

As expected, Fed increased its benchmark interest rate by half a percentage point, the biggest hike in two decades. The central bank also outlined a program whereby it will eventually cut its bond holdings by $95 billion a month. Fed Chair Powell emphasized the commitment to bringing inflation down, though he said a 75 basis points hike is “not something the committee is actively considering.”

 

US 10-year treasury yield eased 3 bps to 2.94%. Dollar index fell 0.9% to 102.50. Gold rose three fourth of a percent to $1881 per ounce.

 

Oil jumped as the European Union spelled out plans to phase out imports of Russian oil. Brent crude surged $5.17, or 4.9%, to $110.14 a barrel and WTI futures settled at $107.81 a barrel, up $5.40, or 5.3%.

 

European markets fell 0.5%-1.4%. New PMI readings showed euro zone business activity accelerated in line with expectations in April. Euro zone retail sales declined 0.4% in March from the previous month, below a consensus forecast for a 0.1% increase.

 

AT HOME

 

Benchmark indices nosedived 2.3% each on the back of a surprise, off-cycle rate hike by RBI. Sensex settled at 55669, down 1306 points while Nifty lost 391 points to finish at 16677. Sensex and Nifty closed at the lowest level after 11th March and 15th March respectively. Nifty mid-cap and small-cap indices tumbled 2.1% and 2.4% respectively. All the BSE sectoral indices ended in red, with Consumer Durables and Realty indices leading the losses, down 3.9% and 3.3% respectively.

 

FIIs net sold stocks, index futures and stock futures worth Rs 3288 cr, 3233 cr and 777 cr respectively. DIIs were net buyers to the tune of Rs 1338 cr.

 

Rupee appreciated 10 paise to end at 76.41/$.

 

Monetary Policy Committee unanimously hiked repo rate by 40 bps to 4.4% with immediate effect. Also, CRR was hiked by 50 bps to 4.5% effective May 21. This marks the first rate hike since August 2018.

 

OUTLOOK

 

Today morning, Nikkei is shut while Hang Seng and Shanghai are up 1.3% and 0.3% respectively. SGX Nifty is suggesting around 140 points higher start for our market.

 

In yesterday's report we had said that 16824, the low made in April, continued to be immediate support, upon breach of which,  16600 and 16200, the 61.8% and 78.6% retracement levels of the entire 15671-18115 upmove, would be next downside levels to eye.

 

Nifty broke 16824 and plunged all the way to 16623 before closing at 16677. The benchmark is set to open near 16800 today.

 

16600, the 61.8% retracement level of the entire 15671-18115 upmove, in the vicinity of which Nifty made a bottom yesterday, is the downside level to eye. If that breaks, 16200, the 78.6% retracement level of this upmove, would be the next support; 17100 is the immediate hurdle on the hourly chart, with the stop-loss of which, trading shorts can be held on to.

 

35016, the bottom made on 28th March, is the next support for Banknifty, below which, 34700 would be next downside level to eye; 36100 is immediate hurdle.