WEAKNESS

Once again the markets opened with a gap down, for the fourth time in the last five trading sessions, but within the next two hours of the trading session, the markets recovered and continued to trade in the positive territory, but with a series of ups and downs , exposing the extremely negative undercurrent of the market. The markets finally broke down towards the end of the first half of the trading session, overwhelmed by the selling pressure and touched the lowest point of the day and could not recover much from the lows and eventually both , Nifty and the Sensex closed down by 25 and 67 points respectively. The market breadth was extremely negative with 404 advances to 1066 declines. With a exception of FMCG, there was across the sector selling, and the biggest looser were the Banking shares, followed by the Energy and Midcap shares. The star performers of the day were ITC, Ranbaxy & Bajaj Auto.

On the derivatives side Nifty future closed at 4984, with 9 points premium to the spot, along-with a moderate fall in open interest.On the options side the PCR increased to 1.06, along with a spike in the India VIX by 3.97%. On the Call options side, with a exception of the 4800 and 5600 calls, there was considerable addition of open interest from 4900 to 5500 calls, with the maximum addition  happening at the 5000 call, while on the Put options side , there was considerable shedding of open interest from 5000 to 5600 puts, but the 4900 put added the maximum open interest followed by the 4800 put. The entire activity in the F&O space indicates more shorts building up in the index options, with the breach of every support level. The levels to watch out for Nifty will be 5008, 5025 & 5042 on the upside and 4948, 4922 & 4888 on the downside. The rupee depreciated once again and the USD-INR future closed at 54.10.

On the international market side, the European markets have closed almost flat and the U.S.markets are also trading flat on the back of a report that Europe’s bailout fund will pay the next installment of aid to Greece, easing concern that the nation won’t qualify for rescue funds as political leaders oppose to austerity. On the energy futures side both Brent and WTI crude futures are trading flat, even after a rise in the U.S. crude oil inventories. The Brent and WTI crude futures are trading at 112.80 & 96.74 $/bbl respectively.