8000 CONTINUES TO BE IMPORTANT SUPPORT; 8240 IMMEDIATE HURDLE

8000 CONTINUES TO BE IMPORTANT SUPPORT; 8240 IMMEDIATE HURDLE

WORLD MARKETS                             

US indices fell a fifth of a percent, amidst rising dollar and fall in oil and digesting remarks of Fed officials.

Dollar index rose a third of a percent to 101.34, extending the winning streak to eight straight day and closing at fresh 13-1/2 year high. The benchmark 10-year U.S. Treasury yield rose to near 2.35%, the highest in nearly a year and half and the 2-year yield was around 1.07%.

Kansas City Fed President said the U.S. economy would benefit from the Federal Reserve raising rates sooner rather than later. St. Louis Fed President James Bullard said he is leaning towards supporting a rate hike next month and argued that the real question now is the Fed's rate path in 2017.

US oil fell 0.6% to $45.69 a barrel after Baker Hughes said U.S. oil rigs increased by 19 to 471. Brent rose 37 cents or 0.8% to $46.86.

Gold fell $8 to $1209 per once, marking a 5-1/2 month low.

The Chinese Yuan hit a fresh eight-year low.

European markets lost 0.2%-1.8%. Basic resource stocks fell sharply on the back of the stronger dollar, which makes dollar-denominated commodities more expensive for buyers paying in other currencies.

For the week, Nasdaq and S & P 500 added 1.6% and 0.8% respectively while Dow inched up 0.1%. In Europe, FTSE and CAC gained 0.7% and 0.3% respectively but DAX ended marginally in the red. Among Asian markets, Nikkei soared 3.4%, but Hang Seng and Shanghai lost 0.8% and 0.1% respectively.

AT HOME

Benchmark indices, after rising more than half a percent, gave away more than they had gained in the late noon plunge to end with modest cuts. Sensex lost 77 points to settle at 26150 while Nifty finished at 8074, down 6 points. BSE mid-cap and small-cap indices however, gained 0.6% and 0.2% respectively. BSE Oil & Gas index rose 1.4%, becoming top gainer among the sectoral indices, followed by 1.3% each rise in Healthcare and Realty indices.

FIIs net sold stocks and index futures worth Rs 926 cr and 597 cr respectively but net bought stock futures worth Rs 843 cr. DIIs were net buyers to the tune of Rs 1143 cr.

Rupee depreciated 31 paise to end at 68.13/$, the weakest level in 9 months.

For the week, Sensex and Nifty lost 2.5% and 2.7% respectively, extending the losing streak to fourth week.

OUTLOOK

Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting a flattish start for our market.

Readers would recall that after Nifty broke the 61.8% retracement level of the recent 8000-8600 pullback placed at 8230, we have been working with the possibility of the retest of 8000 bottom.

Nifty on Friday touched a low of 8048, coming very close to 8000 bottom and vindicating our view.

8000, the 34-month moving average, continues to be important support to eye. While 7900, the 50% retracement level of the entire 6825-8970 upmove would be the next support below 8000, one would have to be prepared for 7650, the 61.8% retracement level of the aforementioned  upmove.

Immediate resistance on the hourly chart is placed around 8240, a crossover of which would generate a buy on the hourly chart and would pave the way for further upmove. 8330, where 34-week moving average is placed, would be the next target above that.

Traders are advised to wait for the breach of 8000-8240 range on either side for taking a fresh directional view on Nifty.