INDECISION

The markets opened on a shaky note, closely following its international peers and stayed very sluggish throughout the day, strangely inspite of deep cuts in the Asian and the European markets. Both the  Nifty and the Sensex stayed range-bound, and closed marginally, up by 9 and 22 points respectively.The star performers of the day were Tata Power, R-Com and Tata motors. The market breadth was also indecisive with 693 advances to 783 declines. There was very little participation from the institutional side, where both the FIIs and DIIs were net sellers, to the tune of merely 328 and 190 crores respectively in the cash market. On the derivatives side, the FIIs sold index futures worth 687 crores and brought stock futures worth 245 crores. Nifty future closed at 5266, with 23 points points premium to the spot and a moderate fall in open interest. On the options side the PCR increased marginally to 0.96. On the call options side, with a exception of the 5000 call, there was addition of open interest from 5100 tom 5600 calls, while on the Put options side the 5000 put added the maximum open interest followed by the 5200 and 5100 puts.

The India VIX was marginally down by 1.83%, clearly reflecting the market sentiment. The entire activity in the spot and the futures markets indicate complete lack of confidence in the market participants, who are selling in the spot market as well as writing calls at higher levels. The root cause of this problem lies in the adhoc policy measures taken by the government on the taxation of FIIs and unnecessary populistic measures of intervening in the pricing of fuels and unfavorable FDI measures. On the technical side, the markets are in a weak zone and the adverse news flows are making matters worse. The levels to watch out for Nifty will be 5261,5286 & 5305 on the upside and 5203, 5192 and 5145 on the downside. The U.S. markets are trading deep in the red, while the European markets have closed in the red on the back of more worrying signs from Spain, where the possibility of a bailout has been ruled out.