THE absolute market movement was narrow with an upward bias. The market hit a high of 5255 and low of 5207 before closing at 5232. Moreover, global cues showed positive sentiment with the US and Asian markets closing in green. Indian indices also moved up after the credit policy announcement as it turned out to be positive event. The market welcomed the 25-bps hike in CRR and repo/reverse repo rate against consensus expectation of 50 bps and 25 bps respectively. Banking, auto and real estate stocks rose sharply, reacting positively to RBI’s policy. But the IT sector, led by TCS, dragged indices down despite a better-than-expected results from TCS. Reliance faces resistance at 1110 levels which can be seen from the built-up of open interest in 1120 strike calls.
Implied volatility on Nifty ATM options cracked from 22% to 19%, showing that the market could be stuck in a narrow range of 100 points of 5160-5260 for the next few days. Also, current implied volatilities on Nifty index are one of the lowest seen in the past two years following global volatility indices (CBOE VIX is quoting at 17%).
The 5200 straddle is quoting @Rs 120 with 9 days to expiry, which implies a narrow range for the April Nifty expiry also. The turnover in F&O segment has fallen from one lakh crore yesterday to eighty nine thousand crore. However, a short strangle may work in this kind of range-bound market. Even a ratio spread of 1x5300 long calls vs 4x5400 short calls can be created. It will be advisable for traders to stay on the sidelines till a definite move starts in either direction.
WHAT TO WATCH OUT FOR
INDIA
RESULTS: TVS Motor, United Spirits and Zee News are among the companies that will announce quarterly results
AUDITED RESULTS:
Polaris Software Lab and Hindustan Zinc will declare audited results.
DIVIDEND: Nestle India will consider an interim dividend
WORLD
UK: Labour market data is expected to show another fall in joblessness. UK: Minutes of the April meeting of the Bank of England’s monetary policy committee will be released.