Last week was one of the highest volatile moves in all markets including ours. If one watches week on week performance the indices have posted marginal gains to almost flat, however, intra week swings were more than 5% daily and on particular days like thursday intraday swing is almost 10%. Russian markets have seen 40% swings. Dow though broke the multi year support at 10700 and closed below it, with the bail out package announced for AIG and Government considering serious long term measures to protect the financial system lead to huge short covering on friday, the tripple witching day for US markets. Does this mean that markets have found bottom? We can say that bottom formation is in progress. Whether the lows touched last week are bottoms for the medium term trend or reversal of bearishness to bullishness is a big million dollar question. The global economic concerns which have surfaced during 2008 prominently cannot wither away, in hurry in a week's time. Just as bull markets have corrections or bear phases, deep bear markets too will have vicious relief rallies and dead cat bounce, to trap the bulls. Thus, one cannot jump to conclusion that the bearish ness has ended, or bull market has begun. One need to remember that markets cannot go up continuously for ever, similarly the markets or all stocks cannot become zero, it is the over reaction on either ends of the markets which represent the sentiment of majority of players, indicating the general trend.
Well coming to this week, we have derivatives settlement on 25.09.2008(Thursday) and the next month settlement will have the Q2 performance of corporates, and H1 performance of the economy in place, some adjustment and pricing in the profitability based on the advance tax payments, exchange rate etc., shall take place, where volatility can be high, though may not be at the level witnessed in the last week. In my view the derivatives settlement should be above August settlement price of 4214, where the indices are resting now. It is also to be seen whether the September monthly closing will be above 4360(August closing), which confirms the bottom formation. In my opinion our markets have seen lows for this year 2008, around 3800 on Nifty & 12500 on Sensex. VIX has closed at 39.12. Nifty futures have closed with a premium of 27 points invites long roll over and some short build up today/ tomorrow, as indices have already posted more thatn 10% gains from the lows touched on thursday. Asian markets are mixed and Singapore Nifty Futures are currently quoting at a premium of 12 points might give slight positive opening and two way movement for our markets today as roll overs pick up to next month series.
Range of for the Day: Nifty might move in the range of 4100 to 4400 during this week.
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