Selling continues unabated; India VIX rockets 16% higher

The market recorded fresh intraday low in early afternoon trade. The Nifty descended lower towards its 50 days simple moving average placed at 12,014.37. Sentiment was hit by Middle East tensions, rising crude oil prices and the rupee slipping below the 72-mark.

At 12:28 IST, the barometer index, the S&P BSE Sensex tumbled 639.86 points or 1.54% at 40,824.75. The Nifty 50 index was down 195.35 points or 1.6% at 12,031.30.

Selling was wide spread. The S&P BSE Mid-Cap index was down 1.91% while the S&P BSE Small-Cap index was down 1.76%. Both these indices underperformed the BSE Sensex.

The market breadth was titled in the favour of bears. On the BSE, 484 shares rose and 1784 shares fell. A total of 155 shares were unchanged. In Nifty 50 index, 3 stocks advanced while 47 stocks declined.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, surged 16.38% to 14.775 amid geo-political uncertainty. The Nifty January 2020 futures were trading at 12,076, a premium of 42.6 points compared with the spot at 12,033.4.

On the options front, the Nifty option chain for 30 January 2020 expiry showed maximum call open interest (OI) of 26.74 lakh contracts at the 12,500 strike price. Significant call writing was witnessed at 12,200 strike price, which added 5.1 lakh contracts.

Maximum put OI of 39.53 lakh contracts was seen at 12,000 strike price. Significant put writing was seen at the 11,600 strike price, which added 2.71 lakh contracts. Maximum put unwinding was observed at 12,300 strike price which shed 1.07 lakh contracts.

Buzzing Index:

Shares of paint makers tumbled on rising crude prices. Kansai Nerolac Paints (down 3.78%), Berger Paints India (down 3.22%), Akzo Nobel India (down 2.46%), Asian Paints (down 2.32%) and Shalimar Paints (down 2.18%) declined. Higher crude oil increases input costs for paint companies, which use crude derivatives.

In the commodities market, Brent crude for March 2020 settlement was up $1.62 a barrel, or 2.36% at $70.22 per barrel. The contract has hit its day high at Rs 70.72, its highest intraday level since 28 May 2019. The contract rose $2.35 or 3.93% to settle at $68.60 a barrel on Friday, 3 January 2020.

Brent crude futures spurted on Friday after a US air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies.

Stocks in Spotlight:

Dishman Carbogen was locked in a 5% upper circuit at Rs 66.95, snapping its four day losing streak. In an exchange filing, the company said that the board of directors will consider buy back of shares on 16 January 2020.

Karur Vyasa Bank slumped 5.02% after managing director & CEO, P R Seshadri, resigned on 4 January 2020 citing personal reasons. Seshadri will resign from his duties on 31 March 2020.

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