Market Snapshot
Markets had opened the week's proceedings on a positive note, mirroring the firm trend in other Asian markets, Sensex opened with a positive gap of 49 points at 12,905 with buying being witnessed across all the sectors. Markets continued with their uni-directional journey as further gains were witnessed in the final hour of trade. The BSE Sensex closed at 13,178 (up 322 points) while the Nifty closed at 3,844 (up 92 points).
The NSE and BSE cash volumes were slightly lower compared to the previous day at INR 62 bn and INR 30 bn respectively. The F&O volumes were also lower at INR 237 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has increased to 26-28% levels. The WPCR of Nifty Options increased to 1.15 compared to the previous 5 day average which is 0.77.
Outlook
The market will open flattish today in line with global markets and absence of any major news trigger. The Nifty is expected to cool down after the 200 point rally seen in last few trading sessions. We can see some profit booking to come in at current levels as markets continue to look for strong event before any movement.
Metals continued to gain strength at the LME and we continue to believe that metal stocks will continue to be market out performer. Auto stocks especially in the Four wheeler segment can show some weakness on the interest rate rise disturbing the demand coupled with increased raw material cost. After recovering yesterday, one can go short on Four-Wheeler counters at current levels today.
The Nifty is currently taking a resistance at the 60 DMA at 3843 and has shown a tendency of reversing from that average in the previous rally. Considering the volatility in the current phase of the market and the fact that the Nifty has already appreciated 210 points in the last four trading sessions, the probability of a profit booking in the coming days is high. We believe that it makes sense to chalk out an exit strategy within this pullback.
The Nifty has a resistance at 3865 followed by 3890 and the support levels are at 3820 followed by 3801
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