Expect volatility to climb with F&O expiry near - Alex Mathews

Markets had opened on a positive note tracking Asian as well as US cues but very soon erased all gains and moved into red in the morning. Later in the second part of the day we saw recovery which took the market back into green and closed at highs. The recovery from the lower levels can be attributed to the consistent buying that we are seeing from the part of the FIIs since the last couple of sessions. Still we can't undoubtedly say that they have resumed their buying but still it indicates that their confidence in our market is building up. Recent data showed that the FIIs inflow was around Rs 2500 crores in the last three trading sessions. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,418 shares advanced while 1,377 shares declined. A total of 149 shares remained unchanged. The breadth swung between positive and negative zone earlier in the day. One another major move by the government reportedly was to allow foreign individual investors to buy local mutual fund units in equity schemes to the tune of $10 billion which also lend support to our markets at lower levels.

Nifty made a commendable come back from the lower levels and closed above the previous close and is fairly tuned to move towards 5582 or above 5600 during the June series. However from July 8th onwards we are going to see the quarterly results pouring in with HDFC to start it followed by Infosys. Keep in mind that the June inflation will not fully reflect the recent rise in diesel price but the coming months and coming quarter will surely reflect the margin pressure. This quarter results should also be watched carefully as rising cost of funds, rising food inflation, rising commodity price and input cost will have its impact on Q1 corporate results but not as much as Q2. Expect volatility to climb as we are nearing the June F&O expiry this Thursday.

Except oil, realty, PSU and IT, all the other sectors made gains. Metal stocks were mixed as metal prices fell on LME but individual stocks like Hindalco, Sterlite etc gained in a better way. Auto stocks gained in a minor way but consumer durable and pharma stocks remained good gainer of the day.

Asian markets were trading with gains tracking gains made in US. US stocks rebounded from the lows led by banks. Hang Seng moved up as bearish sentiment over Chinese index eased and investors were prompted towards the valuation of stocks ahead of the corporate results next month. Nikkei also gained on signs of Greek debt's rollover plan and a rise in retail sales in Japan to -1.3% from -4.8% previously. European markets were mostly in green as British business investment fell to -3.2% slower that the expected level of -7.1. Later in the day we are expecting the US CB consumer confidence, US Richmond manufacturing index and Japanese industrial production. US index futures are trading down around 20 points indicating a negative opening for DOW.

Source : Equity Bulls

Keywords