Settlement jitters - Nifty closes at 4835.30 after huge volatililty!

May series settlement is behind us now, where Nifty has finally made the lowest point for the month too, at 4801.90 in the last hour of trade, due to long unwinding by tired bulls, as most of the rollover to next month series took place on 'short side'. In the process, nifty closing yesterday was the lowest in May 2008, so far, with only one day to spare... i.e., today! My prognosis that Nifty final price will settle between march settlement 4830.25 and april settlement 4999.85 came true almost perfectly, of course at the lower end.

 

Crude cooled further down to US $ 127 overnight, as US GDP data has shown uptick, which strengthened US $ against other currencies. US markets raised overnight, and closed in positive territory, due to surprising good performance from tech sector. CBOE has cooled down to 18 and VIX back home too was down by 14% and closed at 28.08, which suggests some lessened volatility for today. Singapore Nifty futures are currently quoting at a premium of 22 points premium will give positive opening for our markets initially.

 

Today at 12 noon inflation data shall be released which is estimated to be at around 7.92%, will influence our markets there on, based on the actual data. RBI has initiated few measures like, removing curbs on bringing back ECB funds, raising limit on ECB borrowing, raising limit of FII limit on investment in Corporate Bonds etc., overnight, should strengthen the rupee if not ensure stability of the currency, against raising US $ and Crude prices.

 

Government is seriously considering various options to help the PSU oil companies to tide over the risk of running out of working capital to import crude, and suffering from losses on increased sales at less than market/cost prices indigenously. RBI has permitted banks to lend to PSU oil companies upto 25% of working funds(earlier limit was 15%) and also gave green shoe option to lend another 5% in case of urgency and seek ratification later, will ensure availability of comfortable working capital.

 

This is the last day of the week as well as month, since our markets are witnessing heavy selling for the past few days, inspite of stability around global markets, some positive closing can be expected at the end of the session, on NAV prop up by funds, However, it is to be seen whether the closing will be positive week on week too, on any positive development intra day, can force huge short covering, as indices are resting on strong technical levels.

 

Range for the Day: Nifty might trade in the range of 4800 to 5000.