Yesterday ahead of US FOMC meet all markets turned volatile and our markets opened with negative gap to register new lows for the month of september breaching August lows, threatening worst day for equity.. Late in the afternoon once some calmness returned as domestic funds lent support to PSU Banking stocks, lead by SBI huge short covering helped the indices to close flat at the end. US Fed overnight has left the rates unchanged at 2% but considered taking up bail out of AIG, the leading insurer of USA which also is facing bankruptacy situation, due to heavy losses booked so far. Dow has hit 10740 a multi year trend line support and bounced from there to register substantial gains at the end of the session. Singapore Nifty Futures are currently quoting at a premium of 44 points and asian markets are trading in positive territory shall give gap up opening today at the beginning. VIX has closed at 34.90 after hitting a day high 53.62 suggests higher volatility to continue today and for few more days.
Advance Tax Payments from Banks are encouraging, whereas Tata steel & ACC have paid less than previous quarter suggest that all is not well with our economy. Rupee is depreciating everyday due to tight money conditions, on account of advance tax out flows is a cause of concern, which is addressed by RBI by encouraging FCNR and NRE inflows, a decision announced after market hours. This alone in my view shall not help as demand for dollars continue for oil imports and FII capital out flows. Much stronger and quicker measures are required like reduction in CRR or Repo rate too, in line with China. The New Governor's mind and policy is yet to be understood by markets and corporates. Though Dr.Y.V.Reddy was always unpredictable, this type of one sided slide of rupee might not have been allowed by him, hurting the economy. The confidence of FIIs and FDI flows also will be hurt if the currency is not stable and moves in wide range. Already Rupee has depreciated by 16% in the last one month, by any standards, is not conducive for long term business planning. USFDA has banned 30 drugs produced by Ranbaxy shall be a setback to the stock at the opening today.
Nifty found support in the band of 3920 to 3950 in the last two days in the sell off and bounced back to close above 4040 is a good technical level to watch today. Nifty shall try to rally to 4180 to 4220 band today and might face selling pressure there. If support emerges in the band of 4000 to 4020 it is good time to go long for intraday or intra week gains, with suitable stop loss as per the risk appetite of individuals. Until Nifty closes above 4360 bearishness coupled with huge volaility shall continue in extreme short term.
Range for the day: Nifty might move in the range of 3980 to 4180 today.
Strategy for the Day: Buy 4200 puts on rallies and 4000 calls on weakness for intraday trading.
No comments:
Post a Comment