Market Snapshot
After the Reserve Bank of India (RBI) decision to hike the Cash Reserve Ratio and Repo rate last Friday, the Sensex opened with a huge negative gap of 260 points at 12,812. Unabated selling, mainly in auto and banking stocks saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617 points (4.7%) at 12,455. In the process, the index today recorded its second-biggest loss ever in absolute terms. Nifty lost 188 points to settle at 3633.
The NSE and BSE cash volumes were lower compared to the previous day at INR 68 and INR 29 bn respectively. The F&O volumes were higher at INR 281 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has increased to 30-29% levels. The WPCR of Nifty Options decreased to 0.88 compared to the previous day while the 5 day average is 0.91.
Outlook
The sentiment in the market continues to remain weak and we could witness some selling today if the index rises above yesterday’s close. Nifty has taken support at its in 200 DMA.
Yesterday, FIIs were net sellers to the tune of 1432 INR cr in index future and 106 INR cr in single stocks future. The Nifty has seen an OI buildup of 4% on the short side yesterday and a buildup of 8% in the last two trading session along with significant contraction in the cost of carry.
Auto companies have come out with their monthly sales numbers and Bajaj Auto has posted a decline of around 10% in its sales along with a loss of market share. Also, IT companies would further face pressure on account of rupee appreciation which will be affecting their margins and an earning guidance revision downwards is also expected from Infosys.
The Nifty has a resistance at 3647 followed by 3693. The support for the Nifty is at 3630 which is its 200 DMA followed by 3577.
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