FASTEN YOUR SEAT BELTS

The markets opened on a negative note for the fifth consecutive session, and within the first two hours of the trading session, touched the intermediate lows of the day, but once again recovered from the lows and started trading flat within the next half an hour, from that point onwards the markets started falling once again and by the time, the European markets opened, it was a point if no return and all hell broke loose. The markets broke all the crucial support levels on heavy volumes and finally both the Nifty and Sensex closed at the lowest point of the day, down by 114 and 367 points respectively. The market breadth was extremely negative with 456 advances to 1006 declines. There was across the sector selling, but the biggest looser, was the FMCG sector followed by the Banking and Midcap sectors. GAIL,Coal India and Hindalco were the only performers of the day. On the institutional side the FIIs were net sellers to the tune of 399 crores, while the DIIs were net buyers, to the tune of 257 crores in the cash market,

On the derivatives side FIIs were net sellers, both in Index and Stock futures to the tune of 76 and 104 crores respectively. On the options side the PCR fell to 0.94, along-with a massive rise in the India VIX by 9.59%. On the Call option side, with a exception of the 5600 call, there was massive addition of open interest from 5000 to 5500 calls, while on the Put options side, with a exception of the 5000 & 5500 puts, there was considerable shedding of open interest from 5100 to 5600 puts. Nifty future closed at 5005, with just 5 points premium to the spot,  with a massive addition in open interest. The entire activity in the F&O space indicates huge shorts building in the index future and options, which is evident from the massive call writing at all levels and indicates more pain for the markets in the days to come.

On the technical side, a engulfing bearish pattern has formed on the daily candlestick chart and most of the indicators, indicating that the markets are very close to entering the oversold zone. A engulfing bearish pattern during a downtrend, indicates a bullish reversal and the markets may be very close to bottoming out. With the crucial level of 5050, being breached, the levels to watch out for Nifty will be 5050, 5086 & 5170 on the upside, and 4957, 4898 & 4813 on the downside. The rupee appreciated a bit and the USD-INR future closed at 53.38.

On the international market front, the European markets have closed deep in the red and the U.S. markets at trading at their two month lows, on the back of concerns ,whether a stable government will be formed in Greece and doubts regarding the implementation of the austerity measures, may cause Greece to exit the Eurozone. With analysts firmly believing that its only a matter of time , before Greece exits the Eurozone, the fears of the contagion spreading throughout the globe , have increased. On the energy futures side, both Brent and WTI crude futures are trading down by 1.52% & 1.90% at 111.44 and 96.08 $/bbl respectively.