Market Snapshot
On Monday, the Sensex opened with a positive gap of 60 points at 13,346, but profit-taking at higher levels saw the index slip into negative zone in early deals. The index drifted to low of 13,091 on account of weakness in auto, banking and technology stocks. The Sensex finally settled with a loss of 162 points at 13,124.
The NSE and BSE cash volumes were lower compared to the previous day at INR 67 bn and INR 32 bn respectively. The F&O volumes were a touch higher at INR 343 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has increased to 28-29% levels. The WPCR of Nifty Options decreased to 0.94 compared to the previous day while the 5 day average is 1.05.
Outlook
We expect markets to open marginally negative on the back of weak US housing data and flattish cues from Asian indices. The 3900 Nifty level continues to provide a strong resistance as we see fresh shorts coming in at this level. Volatility will continue in the markets today due to expiry of contracts tomorrow.
Nifty rolls have been lower than previous months at 38%. Roll levels will not expand below -3 though they might go to -7 levels. We recommend short rollers to be aggressive at this level and rollover their positions. The Banking sector saw good rollovers (rising from 22% to 40%) on Monday and we expect the trend to continue today.
The 3900 level acted as an important resistance for the Nifty. Not only because the Nifty index is the 50% retracement level of the February correction but also because it is the 13 WMA resistance. We believe that weakness is slowly creeping in the market and this could be the beginning of another round of south bound journey.
The Nifty now has a support 3768 near its 13 DMA followed by 3707, while the resistance levels are at 3881 followed by 3900.
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