Market Snapshot
Mirroring mixed cues from the global markets, the Sensex opened marginally lower at 13,139, and swung in and out of the positive zone in early trades. Aggressive buying in cement, metal and select auto stocks helped the index flare up to an intra day high of 13,254. Eventually, the index ended with a significant loss of over 2% at 12,886 while Nifty lost 85 points and settled at 3,726.
The NSE & BSE cash volumes were slightly lower compared to the previous day at INR 89 bn and INR 40 bn. The F&O volumes were also lower at INR 316 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has increased to 27-28% levels. The WPCR of Nifty Options increased to 0.91 compared to the previous day while the 5 day average is 0.89.
Outlook
In line with negative global cues especially the US markets, we expect the Nifty to open weak and remain volatile throughout the day. We recommend a cautious approach and advise investors to remain hedged on their fresh long positions. The global indices will continue to be in the nervous state in absence of any trigger until Friday when the US payroll data comes out.
The Nifty futures will remain in discount to the spot as fresh shorts continue to come in and markets expectations over dividend declarations in March after the new Dividend distribution tax policy. The Nifty IVs continue to rise as we see buildup in OI across 3700 call and puts.
Pharma, Telecom are expected to outperform the broader market.
Nifty has an immediate support at 3674 followed by 3644 which is its 200 EMA. The market may see some buying at these levels which will have a pullback on the Nifty. The resistance for Nifty is at 3783 and 3842.
Download here