Nifty and Sensex down more than 2% on negative global cues - Alex Mathews

The markets had opened on a positive note tracking mixed cues coming in from the global arena but could not hold on to the early gains and slipped into red and moved in a sideways manner thereafter. Later in the second part of the day we saw weakness building in the Asian space which made our markets to go in search of new lows and finally came to a close in red near to the day's low. Asian markets were down today lead by Chinese stock index was down continuously for the fourth session with Shanghai breaching the 250 DMA. The market fell on news that China may impose more commodity price controls to tame the rising inflation in the country. Also there was news that South Korea raised the interest rates by 25 bps to 2.5% which is the second such rate hike this year. The European markets too opened in red as the US index futures added more to its losses with European inflation speeding near to a two year high on high energy cost. Also concerns over Ireland debt too weighed on the markets globally. In the US, Industrial production rose in October with factory output, mines and utilities increasing around 0.3% against 0.2% in the previous month indicating a strengthening manufacturing side.

In the domestic market, metal, banking, capital goods etc were the laggards. The breadth of the markets was weak with Nifty and Sensex down over 2% each. The US index futures continued to add more to loss in the later of our trading session indicating a negative opening for DOW.

Commodity prices were trading lower which brought selling in commodity stocks across the globe. Precious metals declined as dollar showed strength today also. The rising inflationary pressure in the major base metal consumer China is expected to compel them to go forward with more measure to tame inflation. Aluminum prices fell on news that China will auction 117000 metric tons of aluminum from the country's reserves starting from November 23rd. Rubber prices recovered from the lower levels on concerns of tightening supplies.

Nifty today closed below its psychological mark of 6000 and below its 50 Day Simple Moving Average of 6045. For the first time since June 14th, 2010, Nifty closed below its 50 DMA indicating a weak trend. Tomorrow being a trading holiday, investors were seen reluctant in carrying over their positions. Nifty is having support at 5915 and below it can even fall towards 5728 while the resistance is there at 6045 levels.

Source : Equity Bulls

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