Indices end lower amid volatility; IT drags; banks and media support the market

The benchmark index displayed a phenomenal recovery as it closed at 17,110 on the day of expiry.   

Market update at 3.30 PM: Nifty ends lower by 0.97 per cent amid volatility. The benchmark index displayed a phenomenal recovery in the latter half of the session as it closed at 17,110 on the day of expiry.   

A major supporter of the market was Nifty PSU Bank, which surged about 5.07 per cent while media and auto indices ended higher. Meanwhile, Nifty IT slipped about 3.55 per cent.   

The top gainers’ list includes Axis Bank, SBI & Cipla while HCL Technologies, Tech Mahindra, and Dr Reddy’s Laboratories remained weak.  

With Nifty recovering yet again from 16,800 and 17,000 levels, these levels would be keenly watched for the next expiry.  

Market update at 2 PM: Nifty is going places as it managed to recover about 200 points from its day’s low. The index is currently trading near 17,100 and is down by a per cent. Meanwhile, Sensex has recovered nearly 600 points. Nonetheless, the recovery has been broad-based as Nifty Midcap and Nifty Smallcap have also recovered most of their losses.   

The primary support has been through banking and media stocks. Nifty PSU Bank has shot up by nearly 5 per cent during the process. 

With this, India VIX, which was about 9 per cent higher during the day, has fallen to a negative 2 per cent. Short straddles have been created at 17,000 while January Futures is likely to expire near this level.  

Market update at 12.15 PM: Halfway through the mark and Nifty has tumbled over 2 per cent. The index has breached its day’s low and trades below 16,900. Meanwhile, Sensex has tanked over 1,200 points. 

Even the broader indices felt the heat as Nifty Midcap plummeted about 2.3 per cent while Nifty Smallcap has fallen over 1.5 per cent. On the other hand, India VIX has surged over 9 per cent! 

Nifty IT is the top dragging index and has slipped nearly 4 per cent. HCL Tech and Wipro are the top losers among Nifty stocks. 

With this fall, a huge addition of open interest has been done at 17,000 call options, and shorted puts have been covered. Thus, the market is not expected to close above 17,000 for this expiry. 

Market update at 10 AM: Indices trade lower in the first hour of the trade as Nifty hit a low of 16,927 and has recovered about 80 points. Currently, the index is down by about 1.5 per cent while Sensex lost around 800 points.  

The prominent sectors dragging the market include IT, pharma, metal & realty while Nifty Media and Nifty PSU Bank are trading higher. Moreover, India VIX has surged over 8 per cent.  

The highest addition of open interest has been done at 17,000 calls and put options, indicating the creation of straddles. Thus, market participants anticipate Nifty to be trading near this level.  

Pre-market update: Asian markets have opened lower amid bad global cues with SGX Nifty indicating a loss of over 250 points. Nifty is likely to open below 17,000. 

Last night, the US markets fell drastically after hawkish commentary by the Fed Chairman Jerome Powell. NASDAQ, which remained higher by 2 per cent for almost the entire day, fell in the last hour. Moreover, Dow Jones tanked about 120 points. 

In the last trading session. FIIs sold for Rs 7,094 crore while the DIIs bought about Rs 4,534 crore worth of equity. 

Today, being the monthly expiry, volatility is expected throughout the day. The maximum open interest stands at 18,000 in the call side, followed by 17,500. On the put side, 16,000 and 17,000 have the highest open interest. However, with today’s huge gap-down, the dynamics will be changed drastically and the first hour of the session will be significant in anticipating the further trend of the market.