TRADE WITH CAUTION

The markets opened on a negative note mainly due to profit booking, ahead of a shortened trading week. The sentiment was negative throughout the day, with both the Nifty and Sensex closing for the week, in the negative territory, down by 35 and 111 points respectively. The star performers of the day were BHEL and Ranbaxy. The market sentiment was absolutely indecisive, with 702 advances to 771 declines, which was clearly indicated from these figures, where FIIs were net buyers to the tune of only 46 crores and DIIs were net buyers to the tune of 127 crores in the cash market.On the derivatives side, the FIIs were net sellers in both the index and stock futures, to the tune of 168 and 151 crores respectively. Nifty futures closed at 5344, with premium falling by 11 points, to 22 points and a considerable loss in open interest. On the options side PCR slightly fell to 1.18. On the Call options side, with a exception of 5000 & 5200 calls, all the calls from 5300 to 5600 added considerable open interest, with the maximum addition happening at the 5600 call, while on the put options side, with a exception of 5100 & 5200 puts there was considerable loss of open interest from 5000 to 5600 puts. The entire activity on the F&O side indicates short covering on the futures side, along with call writing at higher levels, which will act as tough resistance points to break, in the days to come. As suggested last week, the sudden fall in the India VIX led to a technical spike up in the markets, but on Wednesday, the  sudden rise in VIX, along with Nifty failing to break the resistance of 5382, is a cause of worry. On the technical side both the daily and weekly charts are in a sell mode, and Nifty has made a clear pattern of lower highs and lower lows from 22nd of Feb to 4th of April, and nifty retracing close to 50% of the gains, is a clear indication that the uptrend may be loosing steam. Going forward the levels to watch out for Nifty, will be 5352, 5367 & 5408 on the upside and 5297, 5260 on the downside. The next two weeks are going to be action packed ,with corporate results, RBI's monetary policy and government's policy on fuel pricing, setting the tone of the market for the rest of the month. On the international markets side, U.S. manufacturing and employment data will be closely watched.