NIKKEI 225 UP ON IMPROVING MARKET SENTIMENT, CHINA STIMULUS HOPES

Nikkei 225 inched up 0.37% to close at 22,614.82 on Monday. The index edged higher as investors took heart from a rally in Chinese stocks on the promise of additional stimulus measures, triggering buying in firms exposed to China.

The benchmark index ended the morning session lower but changed course in the afternoon session to close in positive territory, moving off a six-week low of 22,212.57 hit during the previous session.

The Nikkei 225 is now down around 7.5% since hitting a 27-year high on Oct. 2 as worries over trade disputes, Saudi Arabia and Italy’s free-spending budget in recent weeks have weighed on sentiment.

Among index members, Kawasaki Heavy Industries Ltd plummeted 9.3% to close at its lowest level since November 2016 after the company slashed its forecasts for the current fiscal year, hurt by losses related to its railcar business and to Rolls Royce’s Trent 1000 engine problems. The heavy industrial manufacturer cut its operating profit forecast for the fiscal year ending March 2019 to 66 billion yen from 75 billion yen, while leaving its sales forecast intact at 1.65 trillion yen.

Another Nikkei member, Nabtesco Corp, with a large China-focus, ended down half a percent but managed to partly recover steeper losses from earlier in the day.

Index-heavyweights such as SoftBank Corp and Nintendo declined 1% and 0.1%, respectively for the day.

The broader Topix edged 0.15% higher to end at 1,695.31,

Other top losers in the Nikkei 225 include JX (fell 2.7%), Rakuten (plunged 2.5%), Eisai (fell 1.9%) and Pacific Metals (fell 2.29%) on Monday.

On the economic front, the All Industries Activity Index (MoM) for Aug. released earlier came in at 0.5%. The markets had expected the index to rise by 0.4% MoM. The index change for July was revised to -0.2% from 0% reported earlier.

On the technical front, the RSI is currently at 40.56% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the middle line of the Bollinger Bands and is heading downwards.

Overall Bias is Negative and Short-term trades can be initiated with tight Stop Loss and Take Profit targets.

Trade Suggestion-Limit Sell At 22590, Take Profit At 22470 Stop Loss At 22650

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