Market wrap: Lowest ever volume on record, India VIX spike and Nifty tumble

Barring pharma and information technology, all the other stocks logged losses. Diagnostics and pharma stocks jumped as cases continued to surge in China. 

The India volatility index, which gauges the extent of near-term fluctuation in the market, surged nearly 13% to 15.56, the highest since November 10, 2022. A reading of 15.56 indicates that prices could swing in the range of 15.56% and -15.56%, in the next thirty days.

In the IT sector, analysts expect the movement to be stock-specific as investors reshuffle portfolios in favour of value stocks.

“The Indian equity market witnessed a sharp fall in today’s trading session due to fresh COVID worries. Healthcare sector came into limelight while covid averse sectors were under pain today. However, when Dow futures were trading higher today after yesterday’s gain, we overreacted. While institutional flows in the cash market are declining, F&O players are uneasy following today’s rise in the VIX,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

“Technically, following a strong start, Nifty rejected the 9-DMA and saw a rapid decline; however, it was able to hold the 50-DMA of 18144. On the downside, the area between 18133 and 18080 represents a significant demand zone. As long as Nifty trades above 18080, the general bullish texture will hold, but below 18080, we can anticipate a short-term trend reversal. The 20-DMA of 18550 is a significant barrier on the upside, while 18440 is an immediate barrier. To reverse the bearish scenario, Nifty needs to break through this level. Bulls will anticipate a short covering move since the put/call ratio is oversold.”

“Bank Nifty has slipped below the 20-DMA, where 42200-42000 is an immediate and critical support zone; below this, we can expect any major weakness, otherwise it may bounce back again. On the upside, the 20-DMA of 43300 will act as a hurdle now,” he added.