Edelweiss - Daily Market Outlook 20th April, 07

Market Snapshot

With fears of a possible rate hike in China, the Sensex opened with a negative gap of 133 points at 13,539, and soon tumbled to a low of 13,424 - down 248 points from the previous close, however, fresh buying in banking and select heavyweights helped the index recoup losses as the day progressed. The Sensex finally ended with a nominal loss of 52 points at 13,620 while the NSE Nifty ended at 3,998 (down 14 points).



The NSE cash volumes were slightly lower compared to the previous day at INR 81 bn while the BSE cash volumes were better at INR 41 bn. The F&O volumes were also higher at INR 337 bn.



Sentiment Indicators

The Implied Volatility (IV) across Nifty strikes has increased to 26-28% levels. The WPCR of Nifty Options has increased to 1.03 while the 5 day average is also 1.13. The April futures in now trading at 20 points discount to spot.



Outlook

The markets are expected to open with a positive gap taking strength from its Asian peers. Nifty witnessed a bounce back yesterday indicating buying at low levels. 4019 can act a resistance for the Nifty and continued short covering at these levels can see the Nifty touch 4055 levels.



FII's were net sellers in Index futures to the tune of INR 942 cr. Net selling along with increase in FII OI in Index futures by 4% can be attributed to the contracting CoC and position buildup on the short side.



IT sectors can take cues from the result of Satyam and Wipro. HCL Tech remains to be buy pick among IT counters. Government's announcement over the credit growth for PSU banks can act as a negative sentiment. We recommend to long Parsvnath at current levels.



Nifty has a resistance at 4019 and 4055. The support levels for Nifty are 3984 followed by 3945

Edelweiss - Daily Market Outlook 20th April, 07