SURPRISE

The markets opened on a flat note, and continued to trade in a range for the first two and half hours of trade, but post 11.30 a.m. onwards the markets started slipping on a one way downward journey and to make matters worse, the European markets opened deep in the red, tracking its Asian peers and on the back of  worse than expected economic data from the Eurozone. From this point onwards it was a one-way journey and the markets could not recover and both Nifty and Sensex closed near the lowest point of the day, down by 90 and 277 points respectively. The market breadth was extremely negative with 342 advances to 1142 declines. On the sectoral front major cuts came from the Banking sector, followed by the IT, Midcap and FMCG sector. There was absolutely no respite , with across the sector selling. Sun Pharma and ACC were the only performers of the day. On the institutional side FIIs were net sellers to the tune of 407 crores, while the DIIs were net buyers to the tune of 452 crores in the cash market. 

On the derivatives side FIIs were net sellers in the Index and Stock Futures to the tune of 508 and 177 crores respectively. Nifty futures closed at 5198, with a discount of 2 points to the spot, along with a considerable loss of open interest. Nifty futures closed at a discount for the first time, in the last three months.On the options side, the PCR increased to 1.11, along with a massive jump in the India VIX by 7.36%.On the Call options side, there was massive addition of open interest from the 5100 to 5400 calls, while the 5500,5600 and 5000 calls shed open interest. On the Put option side there was considerable loss of open interest from the 5200 to 5600 puts, while the 5000 & 5100 puts added the maximum open interest.

The entire activity in the F&O space suggests unwinding of longs, on the futures side along with addition of  longs at lower levels on the options side, which indicates some support coming at the lower levels. The sharp fall in the markets along with a sharp rise in the volatility levels is quite normal and may lead to further sell off, before the markets find some stability for themselves.

The levels to watch out for Nifty will be 5232 and 5277 on the upside and 5176, 5154 & 5109 on the downside.

On the international markets front, the U.S. markets are trading deep in the red, while its European and Asian peers have also closed in the red. The rupee depreciated further today and USD-INR futures closed at 52.60. The Brent and WTI crude are trading at 107.86 and 102.47 $/bbl respectively.

Stock Picks

AXIS BANK - BUY 1090 - 1110 SL 1070. TGT 1142,1159, 1170

LT - BUY 1220 -1230 SL 1190. TGT 1269, 1288.