A morning walk down Dalal Street | Nifty should extend towards 11,550 if it closes above 11,370


Indian market closes in the red for the 4th consecutive day in a row. The Nifty50 which is trading below 100-DMA and 5-Days EMA managed to hold on to crucial support at 11300 levels.

Weak global cues weighed on sentiment as the US widens trade war with tariffs on European planes which pulled Asian markets lower.

The United States on Wednesday said it would slap 10% tariffs on European-made Airbus planes and 25% duties on French wine, Scotch and Irish whiskies, and cheese from across the continent as punishment for illegal EU aircraft subsidies, said a Reuters report.

Weak domestic cues also weighed on the sentiment. Weak global economic data and underperformance in banking stocks bought uncertainties to investors.

A shortfall in GST collection may impact fiscal math of the government while bond yield declined in expectation of further interest rate cut by RBI, suggest experts.

The good part is that both Sensex and Nifty managed to hold onto their crucial support levels which is a positive sign. The S&P BSE Sensex closed above 38,100 while the Nifty50 held onto 11300 levels.

The final tally on D-Street – the S&P BSE Sensex fell 198 points to 38,106 while the Nifty50 closed 46 points lower at 11,313 on Thursday.

Sectorally, the S&P BSE Oil & Gas index rose 1.8%, followed by the S&P BSE Realty index which was up 1.1%, and the Energy index was up 0.87%.

On the losing front, the S&P BSE Metal index plunged on 3% on trade war worries, followed by Telecom index which was down 1.7%, and the Banking index plunged 0.9%.

The broader market performs in line with the market – the S&P BSE Midcap index was down 0.3% while the S&P BSE Smallcap index was down 0.38 percent.

Some good news — the offer for sale issue of public sector company Indian Railway Catering and Tourism Corporation (IRCTC) has received a healthy response from investors on the final day of the bidding process on October 3.

The Rs 645-crore public issue has been oversubscribed more than 111 times, the data available on exchanges show.

The big event to watch out on Friday would be the outcome of the MPC policy meeting. Most experts see the central bank cutting rates by 25 bps.

The Indian rupee recovered from the day’s lows and settled higher by 20 paise at 70.87 to the US dollar on Thursday, helped by weakening of the greenback overseas and easing crude oil prices.

On the institutional front, FPIs were net sellers in Indian markets for Rs 810 cr, while the DIIs were net buyers to the tune of Rs 862 cr, provisional dats showed.

Big News:

The Reserve Bank of India is likely to go for yet another rate cut on October 4, the fifth in a row, as inflation is within the comfort zone and the need to boost the economy is pressing.

The government has announced a series of measures including steepest cut in corporate tax, rollback of enhanced surcharge on Foreign Portfolio Investors, among others to jump-start growth which hit a six-year low of 5 percent during the first quarter of the current fiscal.

The six-member MPC is scheduled to announce the fourth bi-monthly monetary policy for 2019-20 on October 4, after a three-day meeting.

Technical View:

Nifty formed a ‘Doji’ kind of pattern on the daily charts which suggests indecisiveness among the bulls as well as the bears

As long as the index sustains above 11,247 levels then a range bound move in the zone of 11554 – 11247 can be expected. However, a close above 11,370 shall be considered as an initial sign of strength for extension of the pullback move towards 11550 kinds of levels.

A close below 11247 levels shall resume the downswing with downside targets placed in the zone of 11180 – 11080 levels which appears to be the crucial support.

Traders are advised to wait for some initial signs of strength before creating fresh long side positions in the index which will be confirmed on a close above 11370 levels, suggest experts.

Three levels: 11247, 11370, 11554

India VIX moved up by 5.61% at 17.70 levels.

Max Call OI: 11500, 12000

Max Put OI: 11000, 11500

Stocks in news:

State-owned power giant NTPC on October 3 said it has added two power generation units of 660 megawatt (MW) each at Tanda and Khargone thermal power plants.

The government has announced mega divestment plans for four blue-chip public-sector companies, but Moody’s Investor Service sees it as a setback. Calling the decision to privatise Bharat Petroleum Corporation Ltd (BPCL) “a credit negative”, Moody’s said it may not bode well for BPCL’s ratings.

Technical Recommendations:

We spoke to IndiaNivesh Securities Limited and here’s what they have to recommend:

Eicher Motors: Buy| CMP: Rs.18,285| Target: Rs 19,800 |Stop Loss: Rs.17,100| Upside 8%

Mahindra Lifespace Developers Ltd: Buy| CMP: Rs.427 | Target: Rs 463 |Stop Loss: Rs.400 | Upside 8%

Kotak Mahindra Bank: Sell| CMP: Rs.1,616 | Target: Rs 1,490 |Stop Loss: Rs.1,700 | Downside 7%

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