NIFTY: "Vol" intine Day!

14 thg 2

It starts with dismay, overnight unwinding continues, NIFTY BANK starts to ascent, aided by Energy, held by the Metals. MSCI rejig has very minor impact on very selective spaces. It looked as if all is well at the close.

Two indexes that needs the narrative to move on is VIX, India VIX it hit high and then closed again around 16, this one is not tradable. CBOE VIX, which is tradable hits 18 and closes near 16.

VIX calls are bought, typically when markets expect down move, as the relative up move in VIX far outweighs the down move. This results in the put options on the Index buying as part of the dynamics.

So, the Volatility or the Vol is rising. Analogy brings this rise almost like that one witnessed in Oct 21. We did loose near 12% from the ATH.

The cause is the US Inflation report. It prints more than what the market bargained for, the Core has gone thanks to the services. The last six months of core up move alone on an annualised basis shoots upwards of 6% against the 2% path.

The rate cuts move past the half year and may be four. Everything that is sensitive sold, nothing spared not even safe heaven Gold. Yields spike, Dollar Rallies, more to go than less.

The cues, this time nothing ordinary a cut of near 1% looks reasonable that takes the base of 21500 under attack, once given we stare around 21000. The dynamics moved now, and one can expect slightly deeper cuts too, as long as we stay below the 21830-850 area.

Later our Inflation numbers, then the UK inflation. Markets still digesting yesterday numbers, follow through is to be seen. Global Equity looks set for another 3-5% fall before we see any stabilisation.

Difficult to push fresh shorts in picture, in any case the high of the first half hour remains the stops for shorts ditto for the longs the lows. Choose the time frame that suits, but for intra-day 30 min is apt.

While capped 21830-850 bulls stare at 20900.