Positives:

• Global markets recovered from the slump yesterday

Negatives:

• Doubts on mega stimulus package

• Anxiety on much higher fiscal deficit

• Safe- Haven assets USD and Gold are still raising.

Global Markets: - Recovered

US market sharply recovered from lows and closed more than 1% up overnight. European markets yesterday closed in deep red with losses more than 2%. Emerging market ETF traded in US stopped sliding and ended flat. However, both safe haven assets, Gold and USD index (DXY) are raising together indicating that the risk-off sentiment is still alive.

GOLD & Dollar- Both are raising

ASIAN Markets this morning: - Mixed with negative bias

Asian markets this morning is trading mixed, most of the indices are trending down since the open. SGX nifty dropped yesterday night below 9000 level but recovered this morning and trading around 9150 levels. This indicates a flat opening for Nifty.

SGX Nifty- Recovered from sub 9000 levels

Calendar events

Wholesale price inflation (WPI) was not released yesterday due to lockdown and only Food and fuel inflation numbers were released. Both met expectations. Forex and money supply data from RBI will be released this evening.

India: Doubts on Stimulus & fiscal deficit are growing.

Press conference by Finance Minister did not live up to the euphoria created by surprise announcement of large fiscal stimulus. Most part of the stimulus is linked to loans that PSU banks will provide at concessional terms. However, PSU banks are burdened with high level of NPA. RBI data has been showing negative growth in loan books of PSU banks for some time now. Therefore, without further capital infusion or without cleaning the bank books of NPA, PSU banks may not go about enthusiastically supporting these announcements.

Bond markets are still holding up with a view that RBI will come to their rescue and buy substantial portion of bonds from secondary market.

Result announcement:

Cipla, Crompton, L&T Finance, Tata Chemicals will declare their numbers today.

NIFTY -Technical Bias:

Price Action & Pattern:

Nifty after failing to break out of 9500/600 range on the upside, has reversed and come back to 9100 levels. Its pointing towards the bottom of rectangle- 8800. Nifty is expected to open flat and trend sideways or lower today.

Falling towards 8800

Trade Ideas:

Option buyers need to be careful because implied volatility (IV) is high and falling. This will cause faster theta decay of premium.

Today spread traders could go for a spread that could benefit from sideways to down wards market such as bearish-vertical-credit spread. However, whoever is holding onto the bear spread entered yesterday may hold it till the market shows tendency to reverse.

India-VIX- High and falling taking option buyers with it