Volatility to stay till May 23, avoid leverage play

The benchmark indices managed to bounce back on May 16 after being pulled down by bears in the previous trading session. This is just the second positive close that the index witnessed in the month of May.

The final tally on D-Street – the S&P BSE Sensex rallied 278 points to 37,393 while the Nifty50 rallied 100 points to close at 11,257.

Among sectors the S&P BSE Oil & Gas rose 1.5 percent, followed by the S&P BSE realty that gained 1.3 percent, and the S&P BSE Power that was up 1.3 percent.

Volatility cooled down slightly but it is still near 4-year high. India VIX fell down 1.01 percent at 28.37. However higher VIX suggests that volatile swings could continue in the market ahead of the election outcome.

Experts feel that the volatility is here to stay till May 23. They suggest investors or traders should avoid leverage play as there could be wild gyrations on either side.

“Markets are volatile, awaiting the outcome of general elections and tracking mixed global cues. We do not see this changing any time soon thus advice limiting leveraged trades,” Jayant Manglik, President – Retail Distribution, Religare Broking Ltd told .

“Nifty has immediate hurdle at 11,300 and its breakout would trigger further recovery else decline may resume,” he said.

Nifty formed a bullish candle and closed above 11,250, which is also its 100-day exponential moving average. The index took support at its 100-day moving average placed at 11,138 for the fourth days in a row.

For bulls to completely take charge, the Nifty has to close above 11,300 convincingly, suggest experts. “Going forward, a spike can be witnessed in either of the directions with a 200-point target based on the direction of the breakout,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told .

“In simple words, a close above 11,300 can propel the index towards 11,500 whereas a breakdown below 11,100 can drag it down towards 10,900,” he said.

Stocks in news:

Phoenix Mills rose 5 percent after the company reported a robust set of numbers for the quarter ended March 2019.

Shares of Interglobe Aviation plummeted nearly 9 percent after reports of an alleged rift between the promoters of IndiGo made rounds.

Tata Chemicals and Tata Global: Shares of both Tata Chemicals and Tata Global Beverages surged 8-10 percent after Tata Group announced the merger of the branded food business of Tata Chemicals and Tata Global Beverages.

Central Bank of India touched a 52-week low of Rs 25.35, falling more than 6 percent after the company’s net losses increased in the quarter ended March 2019.

The share price of Bajaj Finance rose nearly 4 percent after the company reported a 57 percent jump in its Q4FY19 consolidated net profit at Rs 1,176 crore against Rs 748 crore in a year ago period.

Global update:

European markets traded lower despite a late rally on May 15. The pan-European STOXX 600 was down around 0.2 percent.

Asia ended mixed as the US took aim at China’s Huawei again, heating up trade tensions further.

Mainland Chinese shares rose on the day, with the Shanghai Composite adding 0.58 percent to 2,955.71 and the Shenzhen composite gaining 0.43 percent to 1,584.81. The Hang Seng index rose 0.31 percent.

Nikkei 225 slipped 0.59 percent to close at 21,062.98, while the Topix declined 0.43 percent to finish its trading day at 1,537.55. Kospi dropped 1.20 percent to close at 2,067.69.