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.

The Markets on 18 Nov 10 - Volatile Nifty

Nifty was extremely volatile as market and stocks reacted to a host of rumors floating around in the marketplace. It was a slightly bullish opening as Nifty opened well above 6000 but swung wildly as the day progressed. 2G spectrum scam dominated the proceedings as did the banking exposure to MFIs. Both hit the banking stocks negatively as Bank Nifty plunged over 3% at one point of time. Nifty too made a new recent low at 5906 before staging a smart comeback mainly on buoyant global cues. But broadly, domestic events took a centre stage and most of them were negative. Rumors that PM is stepping down aided to the nervousness. Banks were the worst hit as heavyweights like ICICI, Axis, SBI and HDFC Bank witnessed selling. Volumes were heavy in most banking stocks. However, on the positive side metal stocks turned positive mostly on positive global cues. So, strong buying was witnessed throughout the session in stocks like Hindalco, Tata Steel, JSW Steel and Sterlite. Pharma stocks too were active on the positive side as buying was seen in Cipla, Lupin and other pharma counters. Some of the other prominent gainers were Bata, Hero Honda, Bhushan, TVS Motors, GMDC, Jet Airways, Bharti, IOB, Auro Pharma and Ashok Leyland. RCom was the main loser amongst the derivative stocks and despite recovering almost 50% of its intraday losses ended the day around 5% lower. Some other losers included Ruchi Soya, Noida Toll, Unitech, Reliance Cap, Escorts, Rolta, Syndicate Bank, ABG Ship and Indusind.
 

Nifty broadly followed the scenario given yesterday. Only point missing that could have convincingly tilted the balance in favor of bulls is the fact that Nifty couldn’t move past 6000. Sustained trades above 6040 could firmly tilt the balance and one should start building fresh positions again in strong counters. Going by the session’s behavior it looks that stocks like IDBI, Tata Steel, Auto stocks, Cipla, Hindalco, Sesa Goa( keep a stop below 325), Jet Airways, KFA, JP( Stop loss below 116), Voltas and Crompton, to name a few are showing good interest at lower levels.

Nifty has support around 5940-50 and then around 5870 while resistance is likely around 6050.