INFLEXION POINT

As expected yesterday, there was a huge spike in the volatility levels today, ahead of the two major events RBI's quarterly monetary policy review and Union Budget 2012, the Nifty swung 100 points on a intraday basis and made a low of 5362, before closing at 5380, down by 1.53%. While the economic survey provided some solace in the form of a bright outlook for the next financial year, but the political stalemate caused nervousness and the investors started dumping stocks at the available prices, which was clearly evident from the strong negative breadth of 392 advances to 1099 declines and the buy-sell figures, which showed that FIIs were net buyers to the tune of 156 crores, while the DIIs were net sellers to the tune of 389 crores.There was across the sector sell-off but the major cut, came from the banking sector because of  no cuts in the Repo and the Reverse- repo rates. The only performers of the day were HINDUNILEVER and WIPRO. The Nifty futures closed at 5419, with 39 points premium, with addition of open interest. On the options side the PCR was down to 0.93. There was shedding of open interest from 5000 to 5300 calls while the 5500 calls added the maximum open interest, on the put side there was massive shedding of open interest from 5000 - 5600 puts with a exception of 5100 put which added open interest. The entire activity indicates fresh shorts building in the system and at the same time some profit booking happening in all the in- the money puts, which is again a sign of indecision in the market. Going forward tomorrow is a big day for the markets, and the entire movement of the markets will be defined, the way the participants and investors perceive the budget outcome. The levels to watch out for Nifty tomorrow, will be 5440, 5485 on the upside and 5340, 5323 and 5259 on the downside. Meanwhile the U.S. and the European markets are trading in the green, mainly on the back of better than expected jobless claims and manufacturing data.