NIFTY NEARS 8540 TARGET AFTER BEING RESISTED AT 8800 HURDLE AND BREACH OF 8690 SUPPORT; VINDICATES OUR VIEW
US indices plunged nearly a percent yesterday on concerns over Deutsche Bank's stability.
Deutsche Bank plunged 9% to $11.19, hitting an all-time intraday low before recovering some losses to end 6.7% lower on news report that about 10 hedge funds had cut their exposure to Deutsche Bank over concerns the German bank would be crippled by a potential $14 billion settlement with the U.S. Department of Justice over alleged mortgage derivatives misspelling.
The third — and final — read on second-quarter US GDP showed the U.S. economy grew at an annualized rate of 1.4%, slightly faster than previously estimated. Weekly jobless claims rose 3,000 to 254,000, slightly less than expected. Pending home sales fell 2.4% in August, marking the third straight monthly decline
European markets, except a 0.3% lower DAX, gained 0.3% to 1%, with FTSE on the top.
After gaining more than half a percent in the opening trade, Sensex and Nifty nosedived more than two and a half percent from the top of the day on escalating tension between India and Pakistan and finally settled lower by 1.6% and 1.8% respectively. This was the largest single day fall both the indices since 24th June. Sensex settled at 27828, down 465 points while Nifty lost 154 points to finish at 8591. BSE mid-cap and small-cap indices collapsed 3.6% and 4% respectively. All the BSE sectoral indices ended in red with Realty and Power indices leading the tally, down 6.3% and 4.1% respectively.
FIIs net bought stocks and index futures worth Rs 3413 cr and 876 cr respectively but net sold stock futures worth Rs 137 cr. DIIs were net buyers to the tune of Rs 1631 cr. FII cash figure however included Rs 3653 cr for ING Group NV's 2.5% stake sell in Kotak Mahindra Bank.
Rupee depreciated 39 paise to end at 66.85/$.
For the September derivative series, Nifty ended absolutely flat.
Director General of Military Operations Lt General Ranbir Singh told media in New Delhi that the Indian Army has conducted surgical strikes crossing the Line of Control (LoC) into Pakistan Occupied Kashmir inflicting significant damage to the terrorist infrastructure across the border The operations took place on Wednesday night and is now over, he added.
China's September Caixin manufacturing PMI has come in at 50.1, up marginally from previous month's 50.
Today morning, except a flattish Shanghai, other Asian markets are trading with cuts of 1%-1.6% and SGX Nifty is suggesting about 40 points lower start for our market.
Readers would recall that for past couple of session we had been telling that 8690 was the important immediate support on the daily chart, a breach of which can take Nifty to 8540, the bottom made towards the end of August. In yesterday's report we had also mentioned that 8800 is the immediate hurdle on the hourly chart a sustained trading above which is required to bring bulls back in the game.
Yesterday, the benchmark, after touching a high of 8800, reversed on reports of "surgical strike", broke 8690 support and plunged all the way to 8558 before closing at 8591, vindicating our view.
A gap down opening today would take Nifty close to 8540 support. 8540 is also where a trendline adjoining major bottoms on daily chart lands a support and a close below 8540 can take Nifty all the way to 8300, which was the top made in June this year.
8750 is the immediate hurdle on the way up, until the crossover of which, near term bias would continue to be negative.