The markets opened with a positive bias, on the expectation of a favorable outcome on the P- notes taxation aspect, and as expected responded aptly with both Nifty and Sensex closing for the week, up by 116 points and 345 points respectively. The star performers of the day were Kotak Bank, IDFC & SAIL.The market breadth was extremely positive with 1163 advances to 343 declines and the FIIs and DIIs were net buyers to the tune of 962 and 116 crores respectively in the cash market, but on the derivatives side the FIIs were net sellers in Index futures to the tune of 500 crores and net buyers in Stock futures to the tune of 111 crores. Nifty futures closed at 5333, with premium down to 38 points, with a moderate loss in open interest. On the options side the PCR increased to 1.10. On the call side there was considerable addition of open interest from 5000 to 5600 calls, with a exception of the 5100 & 5200 calls, on  the put side the scenario was almost same, with a exception of 5000 and 5500 puts, all the puts from 5100 to 5600 added considerable open interest. The entire activity on the F&O side indicates that there was some short covering, which pulled the markets higher. Although the markets staged a smart recovery, they are still not out of the woods, until Nifty makes a close above 5372. On the technical side, a hammer formation has taken place on the weekly candlestick chart, indicating a trend reversal, but its too early to presume, until Nifty closes above the crucial level mentioned above. The levels to watch out for Nifty, will be 5333, 5372 on the upside and 5229,5193 on the downside.

Stock Picks

Axis bank - BUY 1120-1133, SL 1105. TGT - 1161, 1173

LT -  BUY 1290 -1300, SL 1260. TGT - 1322, 1335