TRENDLINE SUPPORT RISES TO 9850; 9988 CONTINUES TO BE IMMEDIATE HURDLE

TRENDLINE SUPPORT RISES TO 9850; 9988 CONTINUES TO BE IMMEDIATE HURDLE

WORLD MARKETS                             

US indices gained 0.2%-0.3% after two top Democratic leaders said President Trump would support a debt ceiling extension and government funding plan.

Trump broke with his party to support a package that included a short-term debt ceiling extension. If Congress passes the package, which also includes relief funding for Hurricane Harvey, it would prevent a default on the federal debt. However, House Speaker Paul Ryan, a Republican, said the Democrats' proposal is "ridiculous" and "unworkable."

U.S. trade deficit for July came in at $43.7 billion, below the expected $44.7 billion. The IHS Markit PMI for August hit 56.0 and the ISM non-manufacturing index was in line with expectations.

The Federal Reserve's Beige Book found that the U.S. economy expanded at a modest to moderate pace in July through mid-August but signs of an acceleration in inflation remained slight.

European markets, except a 0.2% lower FTSE, gained 0.3%-0.8%.

AT HOME

After falling about seven tenth of a percent in the initial trade, benchmark indices recouped nearly half of the losses through the session to end lower by nearly four tenth of a percent. Sensex settled at 31662, down 148 points while Nifty lost 36 points to finish at 9916. BSE mid-cap and small-cap indices gained 0.2% and 0.4% respectively. BSE Healthcare and FMCG indices tumbled 1.4% and 1.1% respectively, becoming top losers among the sectoral indices while Metal and Basic Material indices were the top gainers, up 0.7% and 0.6% respectively.

FIIs net sold stocks and index futures worth Rs 1353 cr and 763 cr respectively but net bought stock futures worth Rs 507 cr. DIIs were net buyers to the tune of Rs 52 cr.

Rupee appreciated 2 paise to end at 64.10/$.

OUTLOOK

Today morning, except a marginally lower Shanghai, other Asian markets are trading with gains of 0.4%-1% and SGX Nifty is suggesting about 35 points higher start for our market.

Nifty has been in a consolidation mode after hitting a low of 9685 on August 11. As we have been mentioning, an upward sloping trendline adjoining recent bottoms on daily chart is the immediate support to eye. The same is currently placed around 9850 which makes 9850 an important immediate support upon breach of which Nifty might retest 9685 bottom. On the other hand 9988, the top made on Monday, is the immediate hurdle above which 10138, the top made in August, would be the next resistance.

ECB's monthly policy review is due today where Mario Draghi is set to start laying the groundwork for stimulus reduction. The ECB is widely expected to bump up its 2018 growth forecasts on Thursday in what could be the fourth consecutive quarterly upgrade of the projection.