BIGGEST CUT FOR U.S. SINCE JUNE 2020; BIG GAP-DOWN OPEN AWAITS AT HOME

 

BIGGEST CUT FOR U.S. SINCE JUNE 2020; BIG GAP-DOWN OPEN AWAITS AT HOME

 

WORLD MARKETS

 

US indices nosedived 3.9%-5.2% for their worst day since June 2020, following a higher-than-expected inflation report for August.

 

 August consumer price index report showed headline inflation rose 0.1% on a monthly basis despite a drop in gas prices. Core inflation rose 0.6% month over month. On a year-over-year basis, inflation was 8.3%.

 

The yield on the benchmark 10-year Treasury note surged 6 bps to 3.42%. 2-year Treasury yield soared more than 17 bps to 3.748% and hit the highest level since 2007. Dollar index jumped 1.6% to 110. Spot gold dropped 1.4% to $1,701 an ounce.

 

Brent futures for November ended the day at $93.17 per barrel, for a loss of 0.9%. U.S. crude settled 47 cents, or 0.5%, lower at $87.31 per barrel.

 

European markets fell 1.2%-1.6%.

 

AT HOME

 

Benchmark indices rose three fourth of a percent, extending the winning streak to fourth straight day and closing at the highest level after 4th April and 18th January respectively. Sensex settled at 60571, up 455 points while Nifty added 133 points to finish at 18070. Nifty mid-cap and small-cap indices gained 0.2% each. BSE Finance and FMCG indices gained 0.8% each, becoming top gainers among the sectoral indices while Oil & Gas and Realty indices were the top losers, down 0.3% and 0.2% respectively.

 

FIIs net bought stocks and index futures worth Rs 1957 cr and 2936 cr respectively but net sold stock futures worth Rs 1245 cr. DIIs were net sellers to the tune of Rs 1268 cr.

 

Rupee appreciated 37 paise to end at 79.15/$.

 

OUTLOOK

 

Today morning, Asian markets are trading with cuts of 0.7%-2.3% and SGX Nifty is suggesting more than 300 points lower start for our market.

 

In yesterday's report we had said that 18115, the top made in April, was the next upside levels to eye and had advised trailing the stop-loss in longs to 17750.

 

Nifty surged to touch a high of 18088 before closing at 18070 but is set to open below 17800 today.

 

A big-gap down will see Nifty opening near 17750 support mentioned in yesterday's report. Upon sustained trading below support would confirm a sell on the hourly chart and 17484, the low made last week, would be the next downside level to eye if that happens; 18088, the top made yesterday would now act as immediate hurdle.

 

40000, 39500 are supports for Banknifty; 40900, the top made yesterday, would now be immediate hurdle, upon crossover of which, 41800 would be next upside level to eye.