Volatility seen inching higher

The market saw some buying interest with the Sensex on Friday, gained 196.37 points or 0.55 per cent to close at 36,063, while the Nifty 50 rose 71 points or 0.66 per cent to settle at 10,863.

The broad market witnessed strong buying with the Mid-Cap and Small-Cap rising 1.29 per cent and 2.13 per cent respectively. The market breadth was strong with 1906 shares rising and 666 shares falling. Among the sectoral indices, basic materials (1.66 per cent), industrials (1.59 per cent) and metal (1.57 per cent) were higher while sectors like telecom, realty and energy was down.

IndusInd Bank (2.94 per cent), Yes Bank (2.68 per cent), Vedanta (2.24 per cent), Hero MotoCorp (1.78 per cent) and Coal India (1.77 per cent) edged higher from the Sensex pack. Meanwhile, Asian Paints (1.2 per cent), Bajaj Auto (1.16 per cent) and Axis Bank (0.8 per cent) edged lower.

Technical View
Sneha Seth, Derivatives Analyst, Angel Broking, said, "It was the third consecutive series, which concluded in the vicinity of 10800. Post-strong short coverings move on the settlement day of the January series, we saw extension of this move beyond the important psychological level of 11000. But, unfortunately the Nifty failed to sustain at higher levels and slipped sharply below the 10600 mark. Some recovery towards the fag end led Feb series closing slightly below the 10800 mark.

In the series gone by, we witnessed majority of long formation in the Nifty futures and few of these positions have been rolled too. Rollovers in the Nifty stood at 60 per cent, which is considerably lower than the 3-month average of 65 per cent. In fact, in terms of open interest too it was on the lower side. Now, the total outstanding contracts are lowest in last 4 series. At present, the Nifty is light in terms of open interest and further development may dictate its upcoming direction. At the current juncture, 10700-10750 is an immediate base for the Nifty; whereas, hurdle is placed around 10900-10950. However, looking at the last three series price action and scattered open interest in the Nifty options, we expect volatility to inch higher going ahead. As of now, traders are advised staying light in Index until we don't see a sustainable move beyond the range of 10700-11000.

Debabrata Bhattacharjee, Head of Research, CapitalAim, said, "In spite of having rollover pressure it has managed to sustain above 10750. There is a tug war between the bulls and bears around 200 DMA level, where the bears seem to prevail. Going forward the Nifty benchmark is looking in a range bound trade ahead in the near and medium term. The support for the Index in lower side is 10730-10700 while it can face resistance around 10900-10950. A sustainable move above 10950 could form more bullishness in near term towards 11000 or 11200 level.

Market View
Vinod Nair, Head of Research, Geojit Financial Services, said, "The market rallied as cues on ease in border tensions and expectation of US-China trade agreement uplifted the sentiment. Outperformance was seen in bank, Small & Mid-Cap in expectation of rate cut from RBI, after a slowdown in GDP growth in third quarter. Investors are gradually churning their portfolio to high quality small & midcaps, where valuation looks attractive."