A Volatile Day For Nifty

It was an extremely volatile day of trade as Nifty fluctuated wildly, particularly in the last 45 minutes of trade. Nifty dropped almost 100 points to slip below 5700 and then recovered all its losses in the last 15-20 minutes. Banks saw some short covering and were amongst the first ones to recover. The large banks in particular saw some buying at lower levels and helped the indices to stage some comeback. SBI, Axis, ICICI, Indusind, Yes Bank and PNB were amongst the prominent gainers. Some metal counters were also in demand and gains were seen in Hindalco, Sesa Goa and Hind Zinc. JSW Steel however was under immense pressure as it lost over 5%. RIL and most realty counters were also under pressure. Some of the prominent losers were Unitech, GMR Infra, HDIL, Orbit, Orchid, Ispat and Suzlon. IT heavyweights too witnessed some profit taking ahead of Infy’s results on 13^th Jan.

Nifty traded around 5800 for major part of the session before witnessing extreme volatility in last 45 minutes. Nifty bounced back smartly and swiftly from just under 5700. The day’s trading pattern suggests that we may have hit at least a temporary bottom around 5690-5700. Banks could lead a sustainable rebound that might see Nifty move to around 5900-5930 over next 3-4 sessions. Bank Nifty is also finding some support around 10700 and might stage a tradable recovery. It could move to around 11300-11400. Banks have fallen between 25-40% over last 5-6 weeks and might recover 8-12% in this rebound. But, this should still be treated as technical rebound only and one should use this rebound to lighten positions. Some stocks that could see some upside are Sesa Goa, Hindalco (to around 240), Bharti, BOB, SBI, Yes Bank, ICICI bank, REC, Praj and M&M. Any long trades taken in these counters should have a stop loss just below today’s lows.

Nifty finds immediate support around 5730-40 and then around 5685-90 while move past 5845 could take Nifty to around 5925-30.

Markets on 17 Nov 10 - Nifty Collapse

Nifty collapsed in the midsession after a relatively quiet start to the day. The sell off was once again across the board as basket selling was seen in Nifty counters. Nifty tried to stay above 6040-50 but weight of selling ensured a steep decline below 6050 and even below 6000. Nifty collapsed to 5970 before staging a weak rebound to close below 6000 at 5988. Nifty seem to be crucially poised at current levels as the levels of around 5950 have been providing support for past 10 weeks now. Any sustained trades below 5950 would fuel further unwinding and forced bull liquidation. The global cues continue to be negative and there have been renewed fears of Euro zone panic as well as some emanating from China. Next couple of days of trade could be significant and provide cues for future direction. In our view, intraday panic might see Nifty breach the levels of 5940-50 and might even see it drift to around 5875-80. But as of now it seems that market is likely to see a significant rebound and might not see a close below 5950. This volatility could be used by big position players to roll over their positions to next series. In case of the above scenario works out it would be prudent to wait for Nifty to rebound above 6000 to build small positions in resilient and stronger stocks. 
 
Nifty has support around 5940-50 and then around 5870 while resistance is likely around 6050.