Barometers come off day's low; VIX jumps 16%

The market came off the day's low but continued to trade with sizeable losses in early afternoon trade. The Nifty was trading below 9800 mark. At 12:34 IST, the barometer index, the S&P BSE Sensex, was down 2273.51 points or 6.37% at 33,423.89. The Nifty 50 index slumped 666.35 points or 6.37% at 9792.05.

The selloff was triggered by the coronavirus fears after the World Health Organisation (WHO) declared the novel coronavirus (COVID-19) as a global pandemic. Following this, the US President Donald Trump announced to ban all travel from Europe to the United States for 30 days, except from the United Kingdom, to contain coronavirus blow. Markets have also been slammed this week by a plunge in oil prices, after oil exporters said they would increase output rather than cutting production.

 

Selling was broad based with S&P BSE Mid-Cap index declining 7.16% and S&P BSE Small-Cap index tanking 8.21%.

The market breadth was weak. On the BSE, 158 shares rose and 2110 shares fell. A total of 89 shares were unchanged. In Nifty 50 index, all 50 stocks declined.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, jumped 16.35% to 36.715. The Nifty February 2020 futures were trading at 9,732.85, a discount of 17 points compared with the spot at 9,749.85.

On the options front, the Nifty option chain for 26 March 2020 expiry showed maximum call open interest (OI) of 23.13 lakh contracts at the 12,000 strike price. Maximum call writing was witnessed at 10,000 strike price, which added 7.66 lakh contracts. Call unwinding was seen at 12,000 strike price which shed 3.36 lakh contracts.

Maximum put OI of 30.13 lakh contracts was seen at 11,000 strike price. Put writing was observed at 9500 strike price which added 4.20 lakh contracts. Put unwinding was seen at 10,000 strike price which shed 4.22 lakh contracts.

Stocks in Spotlight:

S H Kelkar and Company (SHK), the largest Indian origin fragrance and flavours company in India, on Wednesday (11 March 2020) shared a business updates with regards to the COVID-19 situation in China and Italy. SHK said its business will be largely unaffected by any supply chain disruptions on account of COVID-19. The company directly sources about 20% of its raw material requirements from China and another about 10% is indirectly dependent on China. The company is actively in discussion with all its suppliers to continuously assess and be prepared for any change in the supply situation. Currently, the company holds adequate inventories to support uninterrupted production till April 2020. However, given the evolving nature of the situation, the company will remain vigilant to prioritize delivery to long-term contracts over ad-hoc sales with a possibility of deferring certain sales to early next fiscal year. Shares of SHK were trading 10.7% lower at Rs 81.35.

Biocon said the company has won a US court ruling that invalidated a Sanofi patent on the insulin Glargine, removing a key legal hurdle for commercialization of the product Semglee co-developed with Mylan, in the US. Shares of Biocon were trading 7.25% lower at Rs 274.90.

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