8690-8650 IS THE SUPPORT AREA; 8800 IS THE HURDLE

8690-8650 IS THE SUPPORT AREA; 8800 IS THE HURDLE

WORLD MARKETS                             

Dow and S & P 500 gained 0.1% each but Nasdaq lost 0.2% yesterday, digesting minutes of the September Fed meeting.

Federal Reserve's September minutes reaffirmed expectations for a possible December rate hike. The minutes also showed that the three Fed policymakers who were been in favor of a rate hike at the September meeting were concerned that the delay in raising rates might send the country into a recession.

Dollar strengthened for the third straight day with the dollar index rising to 97.97 from 97.55. Bond yields around the world rose, with the benchmark U.S. 10-year note yield near 1.78%, a four-month high, after the Fed minutes release. The 10-year German bund yield rose to 0.068%.

US oil fell 1.2% to settle at $50.18 a barrel after OPEC said in its latest report that oil production rose to its highest in at least eight years during September and American Petroleum Institute data that showed a U.S. crude inventory build for the first time in six weeks.

Key European markets fell between 0.4%-0.7%. The British pound steadied after a sharp decline Tuesday to trade about 0.75% higher near $1.2214 after U.K. Prime Minister Theresa May said she would provide lawmakers some scrutiny over the Brexit proceedings and that the country would seek "maximum possible access" to EU's single market.

Stocks fell sharply on Tuesday, with the three major U.S. indexes dropping more than 1 percent.

AT HOME

After rising more than half a percent in the initial trade, benchmark indices gave away most of the gains through the session to end just marginally higher on Monday. Sensex added 21 points to settle at 28082 while Nifty finished at 8709, up 11 points.  BSE small-cap index gained 0.25% but the mid-cap index lost 0.2%. BSE Consumer Durable and Metal indices climbed 1.7% and 1.5% respectively, becoming top gainers among the sectoral indices while Realty and Energy indices were the top losers, down 1.2% and 0.8% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 547 cr, 152 cr and 309 cr respectively. DIIs were net buyers to the tune of Rs 469 cr.

Rupee appreciated 14 paise to end at 66.53/$.

After shrinking 2.5% in July, industrial production, as measured by IIP, contracted yet again in August by 0.7%.

Indusind Bank reported 25.8% growth in September quarter net profit at Rs 704 cr. NII rose 33.5% to Rs 1460 cr. Net NPA ratio improved to 0.37% from 0.38% sequentially while gross NPA ratio was at 0.90% vs 0.91%.

OUTLOOK

Today morning Nikkei is up about half a percent on the back of weaker yen, Shanghai is flat, Hang Seng is down more than half a percent and SGX Nifty is trading around 8700, which is down about 40 points compared to Monday's close of Nifty futures.

In Monday's report we had mentioned that 8690-8650 is the immediate support area for Nifty where 8690 is the immediate support on the hourly chart while 8650 is the 61.8% retracement level of the 8555-8807 upmove.

After today's gap down opening, Nifty will be back in this support area. A breach of 8650 would open up the possibility of the retest of the 8555 bottom. On the way up, 8800 continues to be important hurdle to eye.

TCS will report its quarterly earnings after market hours today where dollar revenue is expected to rise 1.8% to USD 4440 mn while in rupee terms it may be up 1.5% at Rs 29738 cr. Constant currency growth is expected at 2.5%. Net profit might fall 0.9% to Rs 6260 cr. EBIT margin is expected at 25.3% as against 25.2% in the previous quarter. Also important would be company's guidance on long term margin target band of 26-28%, outlook on BFSI vertical and discretionary spending.

India's Consumer Price Inflation for September would be released today and is expected to fall to 4.53% from 5.05% in August.

CONSOLIDATION CONTINUES

CONSOLIDATION CONTINUES

WORLD MARKETS                             

US indices fell 0.2%-03% on Friday, digested a weaker-than-expected employment report.

U.S. economy added 156,000 jobs last month and the unemployment rate ticked up to 5% as against expectation of 176,000 new jobs and the jobless rate to hold at 4.9%. The read was a decline from the upwardly revised 167,000 jobs in August (compared to the original number of 151,000). However, average hourly wages rose 6 cents to an annualized rate of 2.6%. The average work week also inched up one-tenth to 34.4 hours.

US oil fell 63 cents to $49.81 per barrel.

Dollar index fell to 96.48 from 97.15. U.S. Treasuries traded mixed, with the two-year note yield around 0.84% and the benchmark 10-year yield at 1.73% percent

European markets, except a 0.6% higher FTSE, fell 0.5%-1.5%.  Sterling was in focus after it nosedived as much as 6% to $1.1819 in Asian trade, hitting a fresh three-decade low in what has been described as a "flash crash." The currency later recovered to hover at the $1.24 handle.

For the week, Dow and Nasdaq fell 0.4% each and S & P 500 fell 0.7%, breaking three-week winning streak. In Europe, FTSE soared 2.1%, CAC ended falt and Dax lost 0.2%. In Asia, Nikkei and Hang Seng added about 2.5% but Shanghai fell 1%. 

AT HOME

After falling about half a percent, benchmark indices recouped most of the losses in the late noon trade to end just modestly lower. Sensex settled at 28061, down 45 points while Nifty lost 12 points to finish at 8698. BSE mid-cap and small-cap indices ended almost flat. BSE Telecom and IT indices were the top losers, down 0.9% and 0.8% respectively while Metal and Industrial indices were the top gainers, up 1% and 0.7% respectively.

FIIs net bought stocks and stock futures worth Rs 56 cr and 71 cr respectively but net sold index futures worth Rs 893 cr. DIIs were net buyers to the tune of Rs 727 cr.

Rupee appreciated 2 paise to end at 66.68/$.

OUTLOOK

Markets in Hong Kong, Japan and Taiwan are shut for public holidays, Other Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 20 points higher start for our market.

In Friday's report we had reiterated the view that 8690 was the immediate support, a sustained trading below 8690 would generate a sell on the hourly chart and would pave the way for the further correction.

The benchmark, on Friday touched a low of 8664, but recovered to close at 8698, holding on to 8690 support on closing basis.

Now 8651 is the 61.8% retracement level of the recent 8555-8807 upmove and therefore Nifty has been finding support in this 8690-8650 region for past two sessions. Once 8650 is taken out, 8555 would be the next support to eye.

Meanwhile 8800 continue to be important hurdle on the daily chart, a crossover of which will also mark a trendline breakout and would pave the way for the retest of the 8970 top made in early September.

NIFTY REBOUNDS FROM 8690 SUPPORT; US JOBS REPORT IN FOCUS

NIFTY REBOUNDS FROM 8690 SUPPORT; US JOBS REPORT IN FOCUS

WORLD MARKETS                             

After falling about half a percent in the initial trade, Dow and S & P 500 recouped all the losses through the session to end near zero line ahead of key September employment report. Nasdaq lost 0.2%.

 Weekly jobless claims fell 5000 to 249,000 as against an expected figure of 257000.

US crude rose 1.2% to settle at a four-month high of $50.44 per barrel. Brent added 1.3% to $52.51.

U.S. Treasury yields rose following the release of better-than-expected weekly jobless claims data. The two-year note yield traded at 0.86%, while the benchmark 10-year yield rose to 1.74%.

Dollar index rose more than half a percent to 96.69, which is the highest level since July 28. Gold tumbled $16 to $1253 per ounce, the lowest in more than three months.

European markets, except a 0.1% higher Italy, lost 0.2%-0.5%.

AT HOME

After gaining about four tenth of a percent in the first half, benchmark indices plunged about eight tenth of a percent from the top of the day in the later half to end lower by four tenth of a percent. Sensex lost 115 points to settle at 28106 while Nifty finished at 8710, down 34 points. BSE mid-cap and small-cap indices fell 0.6% and 0.5% respectively. BSE Oil & Gas and Energy indices gained 2.6% and 1.9% respectively, becoming top gainers among the sectoral indices while Realty and Power indices were the top losers, down 1.5% and 1.2% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 354 cr, 32 cr and 74 cr respectively. DIIs were net sellers to the tune of Rs 124 cr.

Rupee depreciated 19 paise to end at 66.69/$.

The five-day spectrum auction concluded yesterday with government garnering close to Rs 65,789 crore, lower than the expectation of Rs 1 lakh crore.

The Reserve Bank of India (RBI) today released guidelines that will govern payment and small banks. RBI had granted in-principle approvals to 11 entities for setting up payments banks (PBs) in August 2015 and 10 for Small Finance Bank (SFB) in September 2015. As per the guidelines, PBs can accept deposit only up to Rs 1 lakh. Small Finance Banks will have to follow norms relating to minimum balance, inoperative accounts, nominations, and cheques/drafts.

OUTLOOK

In the early Asia trade, British pound plunged sharply to as low as $1.1819 briefly, before climbing back up to around $1.2357.

Asian markets are trading with modest cuts but SGX Nifty is suggesting about 10 points higher start for our market.

In yesterday's report we had reiterated the view that 8800 and 8690 continues to be immediate resistance and support levels respectively, a sustained crossover of either of which is required for the fresh directional view.

Nifty, after touching a high of 8781 in the morning trade, plunged sharply to 8685 but recovered somewhat towards the close to end at 8710, broadly holding 8800-8690 range.

A sustained trading below 8690 would generate a sell on the hourly chart and next support to eye in that case would be around 8600. 8800 continues to be immediate hurdle on the way up, upon crossover of which, 8890 would be the next target to eye.

Key data to eye today would be the US September non-farm payroll which could provide some insight into the timing of an interest rate hike by the U.S. Federal Reserve. According to expectations U.S. economy added 175,000 jobs and unemployment held steady at 4.9%.

NIFTY RETREATS AFTER ACHIEVING 8800 TARGET; 8690 CONTINUES TO BE IMMEDIATE SUPPORT

NIFTY RETREATS AFTER ACHIEVING 8800 TARGET; 8690 CONTINUES TO BE IMMEDIATE SUPPORT

WORLD MARKETS                             

US indices gained 0.4%-0.6% with energy and financial stocks leading amidst surging oil prices and encouraging economic data.

WTI crude climbed 2.3% to $49.83 a barrel and Brent rose 2% to $51.86 after the US Energy Information Administration (EIA) said crude stockpiles fell by 3 million barrels last week, which was the fifth unexpected weekly drawdown in U.S. oil inventories.

September ISM non-manufacturing came in stronger than expected at 57.1 versus estimate of 53. Factory orders also increased slightly in August, while the trade deficit in the U.S. widened more than expected to $40.7 billion in August, and mortgage applications increased 2.9% last week.

In Europe FTSE slipped 06% while DAX and CAC lost 0.3% each on reports that the European Central Bank could start tapering bond purchases before its quantitative easing program ended next March. The ECB later denied it had discussed the subject. Italy and Spain however rose 1% and 0.1% respectively.

AT HOME

After gaining about four tenth of a percent in the opening trade, Sensex and Nifty slipped nearly seven tenth of a percent from the top of the day to end lower by 0.3% and 0.4% respectively, breaking three-day winning streak. Sensex lost 114 points to settle at 28221 while Nifty finished at 8745, down 25 points. BSE mid-cap and small-cap indices however gained 0.5% and 0.6% respectively. BSE Bankex fell 0.8%, becoming top loser among the sectoral indices, followed by 0.6% lower IT index. Realty index soared 1.7% to become top gainer, followed by 0.8% higher Basic Material index.

FIIs net bought stocks and index futures worth Rs 243 cr and 154 cr respectively but net sold stock futures worth Rs 389 cr. DIIs were net sellers to the tune of Rs 350 cr.

Rupee depreciated 4 paise to end at 66.50/$.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.4% to 0.8% and SGX Nifty is suggesting about 20 points higher start for our market.

Readers would recall that after Nifty took out immediate hurdle of 8740, we were working with initial target of 8800, which was the top made on the "surgical Strike" news day and also coincided with a trendline adjoining recent tops on the daily chart.

Yesterday, the benchmark, after touching a high of 8807 in the initial trade, slipped to end at 8744.

8800 continues to be immediate hurdle to eye, a sustained trading above which is required for the fresh upmove. 8893, the top made on 22nd September, would be the next target if that happens. Meanwhile, immediate support on the hourly chart continues to be placed at 8690, with the stop-loss of which existing longs can be held on to.

US EQUITIES EASE, GOLD TUMBLES ON STRONG DOLLAR; STAY LONG WITH THE STOP-LOSS OF 8690

US EQUITIES EASE, GOLD TUMBLES ON STRONG DOLLAR; STAY LONG WITH THE STOP-LOSS OF 8690

WORLD MARKETS                             

Dow and S & P 500 fell half a percent each while Nasdaq lost 0.2% yesterday on the back of stronger Dollar, data from IMF and comments from a Fed official.

Dollar index sored to 96.44 before closing at 96.14, a two-month high. Gold tumbled more than 3% to $1270 an ounce, closing at three-month low and posting its worst trading day since 2013.

IMF, in its "World Economic Outlook" said that Overall global growth is expected at 3.1% in 2016, unchanged from its July forecast. However growth of advanced economies, which include the United States, will slow this year to 1.6% as against 2.1% last year and a July IMF forecast of 1.8%. the growth in emerging markets (EMs) and developing economies is expected to strengthen marginally to 4.2 percent.

Richmond Fed President Jeffrey Lacker said there was a strong case to raise interest rates significantly and keep inflation under control.

Crude oil futures initially surged in the U.S. session on a American Petroleum Institute (API) report of declining domestic crude inventories, but settled just 0.25% higher at $48.69 per barrel on the back of the strong dollar. Brent finsihed down 2 cents at $50.87.

U.S. listed shares of Deutsche Bank rose more than 2%.

European markets rose 0.2%-1.3% with FTSE on the top. Sterling weakened sharply, hitting its lowest level since 1985 on fears of U.K.'s impending exit from the European Union.

AT HOME

Benchmark indices gained about a third of a percent, extending the winning streak to third straight day. Sensex added 91 points to settle at 28335 while Nifty finished at 8769, up 31 points. BSE mid-cap and small-cap indices rose 0.5% and 0.7% respectively. Except a 0.4% and 0.04% cut in Capital Goods and Consumer Discretionary indices respectively, all the BSE sectoral indices ended in green, with Oil & Gas and Telecom indices leading the tally, up 2.3% and 1.3% respectively.

FIIs net bought stocks and index futures worth Rs 344 cr and 347 cr respectively but net sold stock futures worth Rs 31 cr. DIIs were net sellers to the tune of Rs 172 cr.

Rupee appreciated 12 paise to end at 66.46/$.

The Reserve Bank of India cut repo rate by 25 basis points to 6.25%, as a newly set up panel felt that inflation levels were low enough to reduce loan rates. The six member panel, which brainstormed over two days, unanimously agreed that inflation was unlikely to gallop past the tolerance threshold of 6% in the near future. The MPC expects retail inflation rates to hover around 5% by March 2017, the RBI said in a statement, which is well within the comfort zone.

International Monetary Fund raised India’s growth forecast to 7.6% from 7.4% for 2016 and 2017.

OUTLOOK

Today morning, except a 0.4% higher Nikkei, which is cheering a weaker yen, other Asian markets are trading with modest cuts and SGX Nifty is suggesting a marginally lower start for our market.

In yesterday's report we had mentioned that "Upon crossover of 8745, next target to eye would be 8800, which was the top made last Thursday, when the announcement of "surgical strike" came. Above 8800, 8893 the top made on 22nd September, would be the bigger hurdle to eye."

The benchmark touched a high of 8784 before closing at 8769, moving closer to 8800 target.

8800 continues to be immediate target as well as hurdle to eye upon crossover of which 8893, as mentioned above, would be the next target to eye.

Immediate support on the hourly chart is palced around 8690, with the stop-loss of which trading longs should be held on to.

NIFTY SOARS TO CLOSE IN 8740 HURDLE; MPC INTEREST RATE DECISION IN FOCUS

NIFTY SOARS TO CLOSE IN 8740 HURDLE; MPC INTEREST RATE DECISION IN FOCUS

WORLD MARKETS                             

US indices fell 0.2%-0.3% yesterday, digesting mixed economic data and keeping an eye on Deutsche Bank and oil prices.

The September Markit Manufacturing PMI came in at 51.5, a three-month low. The ISM manufacturing index for September came in at 51.5, up from 49.4 in the previous month. Construction spending fell 0.7% in August, as against expectation of a 0.2% increase.

WTI oil rose 1.2% to $48.81 per barrel after Iran's president called on other oil producers to join OPEC in supporting the market with output cuts. Brent prices broke above $50, hitting their highest level since August.

Dollar index rose 0.24%. Gold fell $4.40 to $1313 per ounce.

European markets ended mixed with FTSE climbing 1.2%, CAC up 0.1% while Italy and Spain lost 0.8% and 0.3% respectively. US listed shares of Deutsche Bank fell about 2%, with no official deal being announced between the Bank and the US Department of Justice. British Prime Minister Theresa May said Sunday she'd start the Brexit process in the early part of 2017, a process which is expected to take about two years to complete. The British pound fell about 1 percent against the dollar on Monday, trading at $1.285

AT HOME

Benchmark indices soared nearly a percent and half, registering best single day gain in nearly a month. Sensex added 377 points to settle at 28243 while Nifty finished at 8738, up 127 points. BSE mid-cap and small-cap indices climbed 2.4% and 2.7% respectively. All the BSE sectoral indices ended in green with Realty and Consumer Discretionary Goods & Services indices leading the tally, up 3% and 2.8% respectively.

FIIs net bought stocks and stock futures worth Rs 34 cr and 663 cr respectively but net sold index futures worth Rs 159 cr. DIIs were net buyers to the tune of Rs 198 cr.

Rupee appreciated 3 paise to end at 66.59/$.

Hero MotoCorp registered highest ever monthly sales of 6.7 lac units, a growth of 11% y-o-y. TVS sold 26% higher vehicles at 2.93 lac units. Escort's sales surged 37.8% to 7725 units. M & M sold 69% more tractors at 30562 units. Bajaj Auto total sales were down 2% at 3.7 lac units.

After growing at the fastest clip in 13 months in August, the widely-tracked Nikkei purchasing managers’ index (PMI) survey showed that PMI was 52.1 in September, slightly down from 52.6 in August.

OUTLOOK

Mainland Chinese markets are shut for the Golden Week public holidays. Other Asian markets are trading with gains of 0.2%-0.6% and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that after Nifty rebounded from the vicinity of the crucial 8540 support we had mentioned that 8740 is the immediate hurdle, a sustained trading above which will generate a buy on the hourly chart and would pave the way for further upmove.

The benchmark soared to touch a high of 8745 and closed at 8738, kissing the 8740 hurdle mentioned above.

Upon crossover of 8745, next target to eye would be 8800, which was the top made last Thursday, when the announcement of "surgical strike" came. Above 8800, 8893 the top made on 22nd September, would be the bigger hurdle to eye.

Traders can initiate long positions with the stop-loss of 8690, which is the immediate support on the hourly chart, once 8745 is crossed.

Key event to watch out today would be the interest rate decision to be taken by the newly formed Monetary Policy Committee. Till now, the decision to fix the policy rates was entirely in the hands of the RBI Governor. From now on, however, it will be decided by the MPC, comprising three members from the RBI and three others nominated by the government, with the Governor (Patel) holding the veto power to vote in case of a tie. Arguments in support of a rate cut stem from a good monsoon in most parts of the country, industrial growth contracting 2.4% in August and GDP growth slowing to 7.1% in the June quarter from 7.9% in the preceding one. Consumer inflation has fallen to 5.05% in August from 6.07% a month earlier (July). However, some argue that the Monetary Policy Committee (MPC) may just want to wait a little longer before resorting to any monetary easing. The decision will be out at 2.30 pm, followed by RBI governor's press conference at 2.45 pm.

8540 CONTINUES TO BE CRUCIAL SUPPORT; 8740 IMMEDIATE HURDLE

8540 CONTINUES TO BE CRUCIAL SUPPORT; 8740 IMMEDIATE HURDLE

WORLD MARKETS                             

Dow climbed 0.9% while S & P 500 and Nasdaq gained 0.8% each on Friday as Deutsche Bank shares rebounded amid a report that the German banking giant was near a settlement with the Justice Department.

U.S.-listed shares of Deutsche bank surged 14%, recovering all of their losses from Thursday and registering its best single day gain since 2009, on news its settlement of a mortgage-backed securities mis-selling case could be reduced from $14 billion to $5.4 billion.

Comments from the Fed Chair Yellen that U.S. central bank might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds also boosted the sentiment.

In economic news, personal spending remained flat in August, while income rose 0.2%. The core PCE, the Federal Reserve's preferred inflation measure, rose 0.2%. Also released were the final read on September consumer sentiment and the September Chicago PMI, both of which beat expectations.

U.S. crude futures settled up 41 cents to $49.06 a barrel on Friday, while Brent futures settled down 0.4 percent at $48.24.

In Europe FTSE and Spain fell 0.3% and 0.2% respectively while DAX, CAC and Italy gained 1%, 0.1% and 0.4% respectively. A flash estimate of euro zone inflation in August came in at 0.4% year-on-year, in line with consensus. Unemployment in the euro zone held steady at 10.1% in August, the same as in July. In the U.K., second-quarter gross domestic product (GDP) figures were revised up to 0.7% from 0.6%.

For the week, US indices managed to eke out gains of 0.1%-0.3%. European market ended with cuts of 0.2% to 1.1%. Asia was the worst performer, falling 1% to 2.8%.

AT HOME

After trading along the zero-line for better part of the day, benchmark indices spiked up in the late noon trade to end with modest gains on Friday. Sensex added 38 points to settle at 27866 while Nifty finished at 8611, up 20 points. BSE mid-cap and small-cap indices soared 2% and 2.1% respectively. Except a 0.1% cut in FMCG index, all the BSE sectoral indices ended in green with Realty index leading the tally, up 3.2%, followed by 1.6% rise in Basic Material index.

FIIs net sold stocks and index futures worth Rs 1028 cr and 1380 cr respectively but net bought stock futures worth Rs 489 cr. DIIs were net buyers to the tune of Rs 1560 cr.

Rupee appreciated 24 paise to end at 66.61/$.

For the week, Sensex and Nifty lost 2.8% and 2.5% respectively, registering the largest weekly fall in nearly nine months.

Shares of Cipla tumbled after the company said US Food and Drug Administration recently concluded audit of its 3 manufacturing facilities at Goa and had issued 4 observations across these 3 facilities.

Maruti reported highest monthly sales of 1.49 lac units in September, a growth of 31% y-o-y.  Eicher sold 30% more Royal Enfields at 57842 units. M & M reported 8% growth at 46130 units. Ashok Leyland however posted 18% dip at 12057 units.

Government cut natural gas price to $2.50 from $3.06 earlier.

Growth in the eight core sectors of the economy during August came in at 3.2%, remaining unchanged at July's level. Fiscal deficit for April to August period for current financial year stood at 4.08 lac cr., which is 76.5% of the full year target.

OUTLOOK

China, Malaysia and South Korea markets are shut today for public holidays. Other Asian markets are up between 0.4% to 1.5% with Hang Seng on the top. SGX Nifty is suggesting about 30 points higher start for our market.

Nifty on Friday touched a low of 8555 before recovering to close at 8611, holding on to the crucial 8540 for the second consecutive day.

8540, as we have been mentioning, is the bottom of the long consolidation phase of August and also coincides with a trendline adjoining major bottoms on the daily chart. If 8540 is taken out, next meaningful support will come only around 8300, which was the top made in June.

On the way up, 8740 is the immediate hurdle on the hourly chart, at least a crossover of which is required for further gains.