Both indices have opened gapdown following global cues and almost hit 2008 lows, from where fund buying in index heavy weights coupled with huge short covering, lead the markets close with gains at the end of the trading. The news that US Fed granted 2 year bridge loan of 85$ billions to AIG to bail it out, and major central banks deciding and acting to pump in liquidity of 180$ billion helped all markets to recover yesterday at the end of the session. The 7 day bear run is thus arrested, and some relief rally can be expected from now on, ofcourse with huge gyrations and volatility as we enter the settlement period next week. Inflation data showed small uptick to 12.14%, suggests that it is not going to fall below 12% as anticipated in hurry. VIX closed at 39.56, intra day high touching 68.33 indicates volatility to stay higher for some time. US markets oscillated between positive and negative territory till mid session, Dow registering new low for 2008 at 10459.44 almost touching 52 weeks low, staged a strong recovery on the news that US government is seriously considering a long term solution to the current credit crisis. Tripple witching, the settlement of options and futures of indices and stocks scheduled for friday(19.09.2008) also lead to huge short covering, which lifted all US indices to post 4% gains over previous day's closing. The strong US markets rally might give some rub off effect on asian markets and our markets too, but, selling pressure can be expected in our markets, at higher levels, thus, going long at the opening should be avoided.
Singapore Nifty futures are currently quoting at a premium of 183 points and asian markets are trading with gains, shall give positive gap up opening for our markets today. Nifty shall face resistance at previous week's closings 4228.45, which needs to be watched with care. The exposure of ICICI Bank to Lehman Brothers investments might force the bank to post MTM loss provisions to the extent of 40$ million during the quarter is putting pressure on the stock, which is an index heavy weight, though the management is putting brave face to dismiss the issue saying the provision is of miniscule when compared to the size of the balance sheet. The PSU banks are finding favor with funds and investors, which have less or no exposure to these interenational institutions which are under going turmoil. The current credit crisis coupled with slowdown of global economy, cannot be solved with short term solutions like injecting liquidity, which is being resorted by all central banks, until the mess is cleaned up with proper systems in place, recovery of financial sector will be a long process. The britain's financial services authority(FSA) banning the short selling in financial stocks till the end of January, 2009 helped european markets, and the hope of such a move by US too helped stability and recovery of financial stocks yesterday, a head of tripple witching settlement.
Range for the Day: Nifty might move in the range of 4040 to 4240 today.
Strategy for the Day: Short Nifty futures at the opening with a stop loss of 50 points above the purchase price for intra day gains, if one is a high risk trader.
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