How do you see the market because Sensex crashed on Monday and bounced on Tuesday. What is your view for 08 December?

It has been an absolutely volatile first two days this week. After the 949 points crash in the Sensex on Monday, the market bounce came with a vengeance as the Sensex gained by 887 points on Tuesday. In a way, the entire losses of Monday were wiped out on Tuesday and the market is almost back to neutral. The reasons for the sharp rally on Tuesday was a mix of selective buying and short covering.

Almost all the high frequency indicators of the stock market were distinctly positive on Tuesday. The A/D ratio stood at a healthy 45:5 while the volatility index or the VIX fell by 8%, although hit is still above the 20 levels. All sectoral indices were in the green but two indices really stood out in the day. The Bank Index jumped 2.5% in the day while the metals spurting by 3.13% on Tuesday.

Foreign investors sold Rs.2,585 crore of equities which was largely neutralized by the domestic buying stocks worth Rs.2,606 crore. It looks like the global investors continue to be wary of the markets due to headwinds that are local and global. In global markets, the Dow gained 1.4% while NASDAQ was up 3.1%. Even the normally staid European markets were higher by 2-3%. In early trades on Wednesday, the SGX Nifty was trading 70 bps higher.

In terms of outlook, it will eventually boil down to cues. Globally, the US Fed hawkishness and the unravelling of Evergrande of China will hold the key. In terms of domestic cues, it is hoped that there are not negative surprises from the RBI on Wednesday when it announces the bi-monthly credit policy.