A sharp spike in the volatility index VIX indicates a high level of uncertainty, and expectations of high ups and downs going forward. FIIs turning sellers is negative for the market, however, DIIs have turned buyers, partly compensating for the FII selling.
“The global liquidity backdrop continues to be positive since the Fed has reaffirmed its accommodative monetary stance. Fed chief’s comment that 2 per cent inflation in the US is far away, is positive for global markets,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“Investors can exploit the high volatility to make investments in segments where valuations are attractive and the risk-reward ratio is favourable. IT, presently under a bit of pressure due to rupee appreciation, offers buying opportunities. Valuations are relatively reasonable and earnings visibility is high.”
Factors driving markets
- Fed stands behind growth: US Federal Reserve Chair Jerome Powell told Congress on Tuesday the economy remained “a long way” from employment and inflation goals and that rates would stay low and bond buying proceed apace until there was “substantial further progress”.
- US bond yields ease: The benchmark 10-year US Treasury yield fell on Tuesday after Powell’s comments. Easy monetary policy tends to weigh on government bond yields, that raises risk appetite for investors.
- Commodities on a high: Prices of commodities continue to remain high, reflecting recovery in economic health. This is also keeping metal stocks buoyant as they see a lot of demand from investors.
How are the blue chips doing?
After opening in the green, benchmark indices strengthened their lead. At 9:56 am, BSE flagship Sensex was up 274 points or 0.55 per cent to 50,025. NSE benchmark Nifty followed and added 82 points or 0.56 per cent to 14,790.
“The Index is trying hard to hold on to 14,700 level. If we manage to keep below it, the Nifty could slide down to 14,500 and thereafter 14,300. On the upside there is a resistance patch at 15,000-15,100 and until that is not crossed, we remain bearish in the short term time frame,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Coal India was the biggest gainer, up 4.53 per cent. Bajaj Finance, SBI, Axis Bank, Indian Oil, Hero MotoCorp, UltraTech Cement, JSW Steel and Eicher Motors were among other gainers.
TCS was the top loser in the pack, down 1.33 per cent. UPL, Power Grid, GAIL, Dr Reddy’s Laboratories, Kotak Mahindra Bank, HUL, Tech Mahindra, Sun Oharma and SBI Life Insurance were other losers in the pack.
Broader markets
Broader market indices traded with gains outperforming their headline peers in morning trade. Nifty Smallcap was up 1.05 per cent while Nifty Midcap added 0.81 per cent. Broadest index on NSE, Nifty 500 was up 0.57 per cent.
Bombay Burmah, Union Bank of India, Bank of India, Westlife Development, GNFC and Indian Bank were among major gainers from the space while Sonata Software, Thyrocare, Sun Pharma Advanced Research, Jubilant Food, Mphasis and Crompton Greaves were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan , which has drifted 1.2 per cent lower over the week as rising yields pressured valuations, rose 0.3 per cent and S&P 500 futures rose 0.1 per cent.
Tech stock selling pushed Japan’s Nikkei 0.4 per cent lower.
