The first reaction from 'Fitch' an international rating agency, down grading indian currency and growth outlook to negative, has spooked our markets in the late trade, where both nifty and sensex have made fresh new lows in 2008. While political uncertainity a head of trust vote on 22nd, is causing some nervousness as channels flash the swing of support in favour and against oscillating in the numbers game, since UPA government has fallen to minority on withdrawl of support from left parties on 10.07.2008, the worst seems to have come already. While sensex completes 40% fall from the top made Jan'2008, Nifty is almost there (3814.26). On final adjustment Nifty could close above previous low of 3849 and sensex close above 12671, are some hopes for a bounce, as crude cooled 5% yesterday, on Bernarke's testimony before senate that energy prices are pushing the demand down. US President Mr.Bush seeking permission from congress to permit opening of 'off shore drilling' to increase domestic production, also sent shivers among 'oil bulls' to book profits. Crude closed at 138$ and further fall from here is really comforting news for all economies and markets. US markets have fallen to 2 year lows and recovered at the end of the trading and the CBOE volatility index now stands at 28 indicates higher volatile times.
VIX closed at 49.77 yesterday, the second highest ever closing since its inception, suggests further heightened volatility. Investors have dumped stocks in yesterday's fall, indicative of capitulation as panic situation is developing, and holding 3815 today confirms the bottom, as valuations of most of the rate sensitives have fallen to mouth watering levels. Nifty futures on adjustment have closed at discount of 32 points, where as on last traded price basis the discount stood at more than 60 points. Singapore Nifty futures are currently quoting at 34 points premium and short covering shall give initial uptick, where we can expect selling from trapped investors/bulls, till clarity emerges on survival of UPA government on 22nd.
Range for the Day: Nifty might trade in the range of 3800 to 4000.
Strategy for the Day: Buy 3800 calls at the opening for intraday trading.
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