DOWNTREND

Surprisingly the markets opened on a positive note, but after the first two and a half hours of the trade, the news of worse than expected inflation figures spooked the markets, and by the time the European markets opened, the markets reacted by touching the intraday lows, at the start of the second half of the trading session, but staged a smart recovery, at the  fag end of the trading session and ultimately both Nifty and the Sensex closed down by 21 and 77 points respectively. The market breadth was extremely negative with 455 advances to 1014 declines. On the sectoral front, the banking sector was the biggest looser, followed by the Energy and the  Midcap sector. However, Asian Paint, Ranbaxy, Sesa Goa and BPCL were the star performers of the day. On the institutional side the FIIs were net buyers to the tune of 355 crores, while the DIIs were net sellers to the tune 145 crores in the cash market .

On the derivatives side the FIIs were net sellers in Index futures to the tune of 327 crores, and net buyers in the Stock futures to the tune of 279 crores. Nifty future closed at 4888, with a discount of 20 points to the spot, along with a considerable addition of open interest. On the Options side, the PCR fell to 0.94, along with a  gain in the India VIX by 3.47%. On the Call options side , the 4900 call added the maximum open interest, followed by the 5200, 5000 and 4800 calls, while on the Put options side the 5000 put shed the maximum open interest, followed by the 5100 and 5200 puts, but the 4700 put added the maximum open interest followed by the 4800 put. The activity indicates that more shorts are building in the Index options, with each passing day, which has been validated by the fact that Nifty future, has closed at a discount, along with a massive  build up of open interest and every rise will be used as a selling opportunity. 

On the technical side, most of the indicators, on both the daily and weekly charts are in oversold zone, but in absence of any divergence, the strong downtrend will continue for some more time, and  with Nifty breaching every support level on huge volumes, the levels to watch out for Nifty will be 4953, 4995 & 5014 on the upside, and 4868, 4829 and 4785 on the downside. On the currency front, the rupee further depreciated and the USD-INR future closed at 54.12

On the international market front, the European markets have closed deep in the red, and the U.S. markets have also declined, as Greece struggled to form a new government amid growing speculation the nation may leave the euro region. On the Energy futures front, both Brent and WTI crude futures are trading down by 1 & 1.5% at 111.14 & 94.64 $/bbl respectively.