India VIX surge over 7 per cent; metal stocks melt!

Market Update at 10:40 AM: Indian markets have recovered from the lows of the day, but it's still trading in the red. Nifty and Sensex are down by 0.80 per cent and 0.59 per cent, respectively.   

The fall in the broader market is more severe as Nifty Midcap 100 and Smallcap 100 plunged 1.33 per cent and 1.34 per cent, respectively.   

Among the sectoral indices, barring Nifty FMCG and IT, all other indices are in red. Nifty Metal index is down by a whopping 5 per cent.   

India VIX has shot up nearly 7.5 per cent and is inching closer to the 14-mark.   

SGX Nifty was seen trading with marginal gains of 6.5 points at 16,345.50 on Friday. However, on Thursday, it plunged more than 200 points. So, as per SGX Nifty, Nifty may open 200 points down from Wednesday’s close.   

The cause of worry for the Indian markets is the US Dollar Index, which has surpassed its March 2021 swing highs of 93.43. As a result, it has witnessed a break of neckline of the double bottom pattern.   

On Wednesday, Nifty opened at a new all-time high and crossed the 16,700 mark. However, it failed to hold onto its initial gains and declined almost 150 points from the day's high. At the end of the day, Nifty closed at 16,568.8 with a 45.75-point loss.   

Technically, on the daily chart of Nifty, we saw the formation of a dark cloud cover-like pattern. Besides, it also formed a higher high & a higher low candle. However, the mid and small-cap underperformance is a big negative factor for the market at the current juncture. A majority of index stocks are also looking tired at their highs.  

We might see the retest of the breakout region of the prior range consolidation, which was seen in the band of 16,350-16,162.55. If Nifty manages to hold its head above the levels of 16,350, we expect a bounce-back in the markets, up to the levels of 16,480.   

Overall, we could see a knee-jerk reaction and as in the past, we have seen that the market participants get influenced by these sorts of knee-jerk reactions, which further draw them towards buying.