Crude touches 112$ and IMF forecasts global slowdown!

Our markets opened in negative territory, and wer volatile oscillating between positive and negative territory till about 2.30 p.m. and buying in index heavy weights, coupled with short covering helped the indices to climb above 5DSMA and 20DSMA on closing basis, at the end of the trading session, albiet, low volumes, which is a regular feature ever since the crash in January' 2008, participation got reduced a lot. Crude touched 112$ and then cooled off to 110$ later yesterday, on global slowdown forecast by IMF. Bank of Japan has left rates unchanged, and the manufacturing data shown a decline of 12.7%, which makes Nikkie open negatively already. US markets opened and traded in negative territory during the entire session and closed negative on profit booking. Bank of England will meet today to decide on rates, the home sales data from UK also reportedly falling.

While all markets traded in negative territory and closed in negative territory, our markets have closed in positive territory, due to short covering, makes them vulnerable to sharp fall today once again, with weak global cues. Singapore Nifty futures are trading at 29 points discount right now, indicates a gap down opening for our indices. VIX (Volatility index on Nifty Options) shown an increase of 21.7% over tuesday's level of 31.40, now stands at 38.24, indicates increase in volatility further. Steel companies have announced Rs.5,000/- per ton, raw material surcharge on the end product, to be passed on to the end users, to justify the price rise, and explain to government the factual position, has hurt steel stocks yesterday. Automobile companies started raising the prices, to pass on the input cost to consumers, and higher oil prices, force the government to pass on the loss of oil marketing companies, which will push prices of petrol and diesel. All these factors push inflation further up, which hurts growth. Yes bank results were better than expected, in view of the fear among investors on the forex derivatives exposure which is to be declared in AS 30 under new ICAI rules, is a relief. However, Yes Bank is a small private sector player and has no exposure at all, how ICICI Bank, HDFC Bank deal with their exposures, which are index heavy weights is important to be watched upon.

Range for the Day: Nifty might trade in the range of 4600 to 4800.

Strategy for the Day: Buy 4600 calls on weakness and 4800 puts on rallies, for intraday trading.