DG -MAN FROM PLRIQUEZA BACK WITH SHORT IDEA FROM 27172 TILL ENJOY THE RALLY IN PSU/PSU BANKS/METALS/SMALL & MID CAPS

27172 from where DG -Man From PLRIQUEZA Back With Short Idea Till Enjoy the Ride the Rally in Mid / Small / PSu / Psu Banks/ Metals

WEEKLY WISDOM

CHINA STIMULS SPARKS BIGGEST WEEKLY SURGE IN 16 YEARS

WORLD MARKETS

Big highlight of the week was the mega surge in Chinese equity market as the country launched a large-scale stimulus package in a bid to boost growth and restore confidence in the world’s second-largest economy. This had a positive rub-off for various commodities and European markets.

For the week, Dow and S & P 500 gained 0.6% each while Nasdaq climbed 1%, all extending the winning streak to third consecutive week. In Asia, Chinese and Hong Kong markets galloped 13% each, clocking their best week in almost 16 years. Nikkei surged 5.6% while Nifty rose 1.5%. In Europe, DAX and CAC surged 4% each while FTSE rose 1.1%.

U.S. 10-year treasury yield inched up 1 bps. Dollar index fell 0.3%. Gold rose 1.4%. Oil plunged nearly 4% as the prospect of growing oil supplies from Saudi Arabia overshadowed China’s efforts to stimulate its economy.

On Tuesday, China announced its most aggressive economic stimulus since the COVID-19 pandemic, with interest rate cuts and government funding. The People’s Bank of China said it is cutting its seven-day reverse repo rate to 1.5%, the second reduction in around three months, and slashed the reserve requirement ratio of financial institutions by 0.5 percentage point.

Now let's have a look at the week's activity day-by-day.

On Monday, U.S. indices gained 0.1%-0.3% with the Dow and S & P 500 climbing to fresh closing highs. S&P Global said its flash U.S. Composite PMI Output Index was little changed at 54.4 this month compared to a final figure of 54.6 in August.

On Tuesday, U.S. indices gained 0.2%-0.6% with the Dow and S & P 500 hitting record highs. Data from the Conference Board showed U.S. consumer confidence unexpectedly fell in September to 98.7 from an upwardly revised 105.6 in August and below the 104.0 estimate.

On Wednesday, Dow and S & P 500 fell 0.7% and 0.2% respectively while Nasdaq ended marginally in the green. New home sales slipped 4.7% in August to 716,000, down from July’s revised reading of 751,000.

On Thursday, Dow and Nasdaq gained 0.6% each while S & P 500 rose 0.4% following the release of upbeat U.S. economic data. S & P 500 hit a new record. The final reading of second-quarter GDP was unrevised at a strong 3%. Weekly jobless claims fell by 4,000 to a four-month low of 218,000, below the 225,000 forecast. Durable goods orders for August were unchanged versus expectations for a decline.

On Friday, Dow inched up a third of a percent to hit a fresh record high, but S & P 500 and Nasdaq fell 0.1% and 0.4% respectively.

August’s personal consumption expenditures price index — the Federal Reserve’s favored measure of inflation — increased 0.1% month-on-month, matching expectations, after an unrevised 0.2% gain in July. It increased 2.2% y-o-y, below the 2.3% forecast and down from 2.5% in July. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2% last month, slightly below the 0.3% estimate and down from 0.5% gain in July.

Yen strengthened against the greenback on Friday after Shigeru Ishiba, seen as an interest rate hawk, was set to become Japan’s next prime minister. Tokyo’s inflation rate for September eased to 2.2% from 2.6%, while core inflation was in line with expectations at 2%.

France's preliminary composite PMI came in at 47.4, an eight-month low and far below a forecast of 50.6 — and down from 53.1 in August. Germany's flash composite PMI fell from 48.4 in August to 47.2 in September, a seven-month low. France and Spain both published preliminary data showing a sharp drop in harmonized inflation. The OECD said it expects the U.K. economy to expand by 1.1% this year and 1.2% next year. That’s up from previous forecasts of 0.4% growth in 2024 and 1% in 2025.

AT HOME

It was a record-breaking week as Nifty hit intraday record highs on all the five sessions. On a closing basis also, the benchmark hit record highs on all days except on Friday. For the week, the benchmark gained 1.5%, extending the winning streak to a third consecutive week. Broader indices however underperformed, with mid-cap index rising just 0.3% and small-cap index falling half a percent. For the small-cap index, this was the second consecutive negative week. Except 0.4% and 0.04% lower Private Bank and FMCG indices respectively, all the NSE sectoral indices ended higher, with Metal and PSE indices on the top, up 7% and 5.1% respectively.

India's Services PMI stood at 58.9 in September, down from 60.9 in August and manufacturing PMI stood at 56.7, down from 57.5 in August. Composite PMI fell to 59.3, down from 60.7.

FIIs net bought stocks, index futures and stock futures worth Rs 7269 cr, 229 cr and 18324 cr respectively. DIIs were net buyers to the tune of Rs 17903 cr.

OUTLOOK

In the U.S., Fed Chair Powell is slated to speak on Monday. Most important economic data to eye would be Friday's nonfarm payroll for September. Other data to watch out include, Chicago PMI on Monday, manufacturing PMI, construction spending and JOLTS job openings on Tuesday, ADP employment on Wednesday, weekly jobless claims, services PMI and factory orders on Thursday.

In Europe, statistics agency Eurostat is scheduled to publish flash euro zone inflation data for September on Tuesday. This week, inflation in France and Spain rose less than expected, boosting expectations for an October rate cut from the European Central Bank to more than 90%. Eurozone unemployment data is also due. U.K. GDP data will be out on Monday.

China will release the official PMIs for September on Monday.

Japan will see the release of the BoJ summary of opinions from the most recent Central Bank meeting which will be scrutinized for clues about the likelihood of another rate hike before year-end. Japan’s employment data for August will be released on Tuesday, followed by the Tankan survey on Thursday.

For Indian markets economic data, foreign and global flows will be watched along with global cues.

On Monday, the Controller General of Accounts will release government finance data for August. while the Ministry of Commerce will announce core sector output for the same month. S&P Global will release the HSBC Manufacturing PMI for September on Tuesday, followed by Services PMI on Friday.

The Indian bourses will be closed on Oct. 2, marking Mahatma Gandhi Jayanti.

Taking cues from the charts, 26277, the top made on Friday, is the immediate hurdle, upon crossover of which, 26400, followed by 26550 would be next upside levels to eye. 25950-25900 is the immediate support on the hourly chart, upon breach of which, 25700, around which a trendline adjoining bottoms made in early September are placed, would be the next downside level to eye. Meanwhile, trading longs can be held on to with the stop-loss of 25900.

“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”