India VIX near 4-year high; monsoon to be key trigger ahead

After a strong bullish candle seen on Tuesday, traders were hoping for a stable Wednesday. However, bears soon took control in the last hour of the trading session and pushed Nifty below crucial support levels.

Trade tensions, profit booking at higher levels, mixed results from India Inc., delay in monsoon as well as growing uncertainty around election outcome on May 23 are keeping traders on the edge.

The monsoon will hit Kerala on June 6, five days after its normal onset date, the India Meteorological Department (IMD) said on May 15.

Bulls failed to retain control on D-Street as bears made a comeback and pushed the index towards 100-day moving average placed at 11,134 by making a large bearish candle on the charts.

The index witnessed a selling pressure near its 5-day exponential moving average (EMA) and 100-day EMA. The fall in the index was led by metals, telecom, power and auto stocks.

India VIX, the fear gauge of the index rose 5.4 percent to 28.61 that is near a 4-year high, CNBC-TV18 said. The index has already risen about 80 percent so far in 2019.

In terms of sectors, the S&P BSE Metal index fell sharply over 2 percent, while the telecom index was down 1.9 percent, and power index fell 1.5 percent. The S&P BSE Midcap index fell 0.67 percent, while the smallcap index was down 0.45 percent.

“Market slid on profit booking despite an initial extension in yesterday’s rally as investors remained watchful on global trade and liquidity squeeze by FIIs,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told .

“Rupee strengthened after RBI announced a plan to conduct an open market operation. IMD predicted southwest monsoon to start from next month onwards which will be a key trigger for consumption and rural economy,” he said.

Stocks in news:

Union Bank of India fell over 10 percent as its net loss widened to Rs 3,370 crore in the fourth quarter of 2018-19 mainly on account of higher provisioning. Most brokerage firms retained their rating, but Credit Suisse and CLSA slashed their respective target price and earnings estimates.

Jet Airways ended over 5 percent lower hitting 52-week low after four top executives quit the airline on May 14.

Karur Vysya Bank declined 6 percent after the company reported mixed set of numbers for the quarter ended March 2019.

SpiceJet ended over 7 percent higher after the budget carrier emerged as the biggest gainer in the allocation of domestic slots left vacant by Jet Airways.

Zee Media Corporation closed over 11 percent on May 15 after the media house reported a 73.1 percent decline in profit after tax (PAT) for FY19 at Rs 13.17 crore.

Global Update:

European markets are trading slightly lower as trade fears linger. The pan-European STOXX 600 was down 0.32 percent.

Asian markets ended higher as Shanghai composite added 1.91 percent to 2,938.68 and the Shenzhen component rose 1.45 percent to 9,169.15.

In Hong Kong, the Hang Seng index added 0.73 percent. Japan’s Nikkei 225 rose 0.58 percent to close at 21,188.56, while the Topix index added 0.60 percent to finish its trading day at 1,544.15.