Market Snapshot
The Sensex opened with a huge positive gap of 158 points at 12,573. After advancing to higher levels, the market witnessed intra-day profit taking wherein the index touched a low of 12,427.The index, however, bounced back to higher levels backed by aggressive buying in technology stocks. The Sensex rallied to a high of 12,760, before settling with a gain of 282 points (2.3%) at 12,697. Nifty gained 80(2.3%) points to close at 3655.
The NSE & BSE cash volumes were slightly lower compared to the previous day at INR 84 bn and INR 38 bn. The F&O volumes were a touch higher at INR 354 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has decreased to 30-31% levels. The WPCR of Nifty Options increased to 1.17 compared to the previous day while the 5 day average is 0.87.
Outlook
We expect the market to open marginally positive taking cues from its Asian peers. The US wage and production data and Yen carry trade has brought some comfort to dollar and interest rate markets across the world softening the negative tone.
We expect the IT sector lead by Satyam, WIPRO, Infosys and other Telecom stocks to outperform the market. Cement sector may see continued selling after the cement manufacturers have agreed to lower their prices.
Yesterday, FII’s bought INR 1338 CR of Index futures indicating investor’s sentiments to take positions in broader market over single stocks. Nifty OI also saw a fall on Tuesday after 6 consecutive days of OI buildup implying short covering. We expect this short covering to continue as there is some large OI in Nifty leading to a reduction in discount for Nifty futures over spot.
In the last five weeks Nifty has fallen by around 700 points from its all time high of 4245. Technical charts expect a bounce back to 3800. 3591 and 3561 are support levels for Nifty. The immediate resistance is at 3740 and 3800.
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Thanks Yash