Fear grips markets as India VIX shot up over 13 per cent
On the options’ front, the 17,500 Call option has seen the maximum open interest addition in today’s session as it added nearly 27.83 lakh shares in the open interest in the 17,500 Call strike.
Market Update at 3:00 PM: Indian markets have plummeted sharply in the last one and a half-hour of the trading session and it is seen trading near the lowest point of the day. Nifty is trading down by nearly a per cent with market breadth being extremely poor as only 9 stocks of Nifty 50 index were seen trading in green as against 41 declines.
The broader market indices were underperforming the frontline gauge with Nifty Midcap 100 and Smallcap 100 index plunging 1.87 per cent & 1.43 per cent, respectively. Interestingly, India VIX jumped over 13 per cent and it is trading above 17.
On the options’ front, the 17,500 Call option has seen the maximum open interest addition in today’s session as it added nearly 27.83 lakh shares in the open interest in the 17,500 Call strike.
Market Update at 11:30 AM: Nifty has recovered almost 180 points from the day’s low and now, it's trading in green with gains of 18 points above the 17,600 mark. Reliance Industries, ITC, Hindustan Unilever, and Bajaj twins are seen contributing to the index gains.
Among the sectoral indices, the majority of the sectors were trading in red with Nifty Metal leading the losers. On the other hand, Nifty Media and Nifty FMCG were the top two gainers with Nifty Media surging over 3 per cent and Nifty FMCG gaining 1.66 per cent.
A divergent trend has been witnessed in the broader markets with Nifty Smallcap 100 adding 0.13 per cent while Nifty Midcap 100 is seen trading below the neutral line.
India’s key benchmark indices advanced more than one per cent in the week gone by, led by a slew of positive announcements with regards to production-linked incentive (PLI) scheme and big bang reforms in the telecom sector. The broader markets too witnessed a good upmove with Nifty Midcap outperforming the frontline gauge while Nifty Smallcap added 0.94 per cent. India VIX surged 9.25 per cent and closed at 15.23.
In the week gone by, Nifty traded in a much wide range of nearly 524 points, which is greater than the 10-week average range of 385 points. Interestingly, the highest range day in the week gone by was on Friday as Nifty daily’s range was about 255 points. Moreover, it met most of the criteria of the key reversal bar.
A key reversal bar is the one that develops after a prolonged rally. Often, the trend would be accelerating by the time the price experiences the key reversal bar. This pattern has the following characteristics as defined by Martin Pring: Firstly, the price opens strongly in the direction of the prevailing trend. Secondly, the trading range is very wide and thirdly, the price closes near or below the previous close.
Going ahead, the level of 17,250 is likely to act as key support for the index in the near term and as long as the index is above this level, we may expect stock-specific action to continue in the markets. Meanwhile, on the upside, the level of 17,770-17,800 may act as a strong resistance zone for the index. We expect the index to trade in this range in the coming week.