Our markets opened with negative bias initially and short covering at lower levels, and select buying in Tech stocks an Metals, due to weakening of rupee, prompted inidces to turn positive, though ONGC, an index heavy weight was down 7% due to concerns on its future profitability as there is no clear cut formula announced by government to compensate its losses on selling crude at subsidised rates to OMCs. Currently the difference between the international crude and actual rate offered is quite wide running to 45$ is eating into its profitabilitty. Nifty found support for the third day in the range of 4910 to 4940 is a positive sign, amidst increase in volatility suggests that markets are trying to find an intermediate bottom around 4900 levels. Both indices have closed above 5DSMA Nifty(5009.3O) & Sensex(16881.97). 20DSMA placed at currently Nifty(5057.21) shall offer some resistance today. Crude cooling a bit to 124.22 $ and milder than expected CPI numbers have induced a rally in US markets overnight, however tech stocks fall in the late hour lead to giving away most of the gains at the end of the session. Both Dow & Nasdaq are trying to pierce 200DSMA and worries about slowing down of US economy are seems dying down, talk that Fed might start raising rates from October to fight inflation, due to raise in commodities prices, lead to strengthening of US dollar against other currencies.
VIX has cooled 12% and closed at 29.22 should bring down the volatility today to some extent, which is being experienced since the beginning of the week. Asian markets are trading positive and Singapore Nifty futures currently quoting at 14 points premium, should give positive opening for our indices initially. Government could pursuade Cement Manufactures too to reduce prices by Rs.7/- per bag, and to hold prices for 3 months, should help in containing inflation in the coming months.
Range for the Day: Nifty might trade in the range of 4940 to 5080 today.
Strategy for the Day: Buy 5100 puts on rallies to protect the portfolios, against any sudden reversal.
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Thank you
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