POSITIVE EFFECT

The markets opened on a flat note, and maintained the same trend, till the monetary policy was announced, which came as an unexpected positive surprise and the market gave a thumbs up, by instantly reaching the highest point of the day, but in the next one and a half hours gave away all its gains. As the picture became clearer, the markets made a almost V shaped recovery and both Nifty and Sensex ended close to the highest point of the day, up by 63 and 207 points respectively. The rally was mainly led by the FMCG sector, followed by the banking and midcap shares. The star performers of the day were Relinfra, Rcom, ONGC, JP Associate and Heromotocorp. The market breadth was positive with 889 advances to 582 declines. On the institutional side, FIIs were net buyers to the tune of 441 crores, while the DIIs were net sellers to the tune of 203 crores in the cash market. On the derivatives side, FIIs brought index futures worth 503 crores and sold stock futures worth 44 crores. Nifty futures closed at 5319, with 30 points premium to the spot, and considerable increase in open interest. On the options side PCR increased to 1.03, along with a big fall in the India VIX (-8.63%). On the Call options side, with a exception of 5500 call, there was considerable shedding of open interest 5000 to 5600 calls, on the put option side, except the 5100, 5500 & 5600 calls, the 5300 put added the maximum open interest followed by the 5200 & 5400 puts. The entire activity in the F&O space indicates that today's rally was a result of massive unwinding of shorts, along with creation of some fresh longs. However it remains to be seen that, with the monetary policy behind us, from this point onward, the focus will shift to corporate results, which will guide the markets. Going forward Nifty must sustain the 5300 level, on a closing basis for few sessions with good volumes, to ensure that today's move was not a false move. The levels to watch out for Nifty will be 5322, 5355 & 5367 on the upside and 5222, 5208 and 5175 on the downside. On the international market front the European markets have closed in the green on the back of good economic data, while the U.S markets are trading in the green on the back of a very optimistic forecast from IMF regarding the growth of the U.S. economy and slowing down of the Eurozone crisis.