WORLD EQUITIES EASE ON HONG KONG PROTESTS; RBI IN FOCUS AT HOME
US indices, after starting with cuts of nearly a percent on Hong Kong protests, recouped most of the losses through the session to end with cuts of upto 0.25%.
Hang Seng plunged 2% yesterday after pro-democracy protest in Hong Kong intensified over the weekend.
Back in the US, pending home sales declined 1% in August and personal income rose 0.3%.
European markets ended with cuts of upto 1.5% with disappointing data weighing on sentiment and protests in Hong Kong affecting some financial firms with exposure to the region. The euro zone economic sentiment index posted a figure not seen since late 2013. The European Commission's estimates also showed that inflation expectations for the bloc had decreased.
Nymex crude rose $1.03 to $940.6 a barrel; Gold gained $3.4 to $1219 an ounce.
Benchmark indices ended modestly lower after a rangbound but choppy trading session. Sensex lost 29 points to settle at 26597 while Nifty finished at 7959, down 10 points. BSE mid-cap and small-cap indices however surged 1% and 1.5% respectively. BSE Healthcare and IT indices climbed 2.2% and 1.8% respectively, becoming top gainers among the sectoral indices while Metal and FMCG indices lost 1.1% and 0.9% respectively.
FIIs net bought stocks and index futures worth Rs 105 cr and 99 cr respectively but net sold stock futures worth Rs 145 cr. DIIs were net buyers to the tune of Rs 235 cr.
Rupee plunged 38 paise to close at 61.53/$, marking a 7-month low.
China's HSBC manufacturing PMI for September has come in at 50.2, same as that of August but down from flash estimate of 50.5.
Asian markets are trading with cuts ranging in the vicinity of half a percent and SGX Nifty is suggesting about 20 points lower opening for our market.
All eyes today would be on the RBI monetary policy review. While the Apex bank is unlikely to lower repo rate as it pursues its fight to combat inflation, there are some expectations of a 50 bps SLR cut. The tone of RBI's statement would be important in setting expectations about when the central bank would lower interest rates.
In yesterday's report we had mentioned that while Nifty had rebounded from an important trendline support placed around 7840, the near term trend will turn bullish only after the resumption of the higher-top higher-bottom formation on the daily chart. In that light we had advised taking any rebound "with a pinch of a salt".
Nifty, after touching a high of 7992, slipped to close at 7959 and is set to open with a gap down today, vindicating our caution.
8038, the 61.8% retracement level of the recent 8160-7842 fall, continues to be the immediate resistance to eye. 7842 is the nearest support.