INCREDULOUS

The markets opened on a positive note, on the back of a feel good factor, that the government may finally take some tough measures to ensure fiscal prudence. The markets continued to trade in the same range, for the first two hours of the trading session,  but from that point onwards it was a one way upward journey and ultimately both the indices managed to close near the highest point of the day. The Nifty and the Sensex closed up by 86 and 274 points respectively. The market breadth was positive with 914 advances to 524 declines. On the sectoral front, Banking sector was the biggest gainer, followed by the Energy, Midcap and FMCG sectors. On the individual stocks front, ONGC, Bharti, Bank of Baroda, Ranbaxy, HDFC and IDFC were the star performers of the day. On the institutional side, FIIs were net sellers to the tune of merely 106 crores, while the DIIs were net buyers to the tune of 130 crores in the cash market.

On the derivatives side, the FIIs sold Index futures worth 661 crores, and brought stock futures worth 638 crores. Nifty future closed at 4913, with 8 points discount to the spot, along with a massive loss of open interest. On the Options side the PCR stayed the same at 1.02, along with a fall in the India VIX by 6.04%. On the Call options side, the 4800 call lost the maximum open interest, followed by the 4900, 5000 & 4700 calls. On the Put options side, the 4800 put added the maximum open interest, followed by the 4900 & 4700 puts, on the other hand the 5100 put lost the maximum open interest, followed by the 5000 and 5200 puts. The entire activity in the F&O space indicates, that today's rally was a result of massive short covering as well as creation of longs in individual sectors and stocks, which also led to some put writing around the 4800 & 4900 levels. On the currency front, the rupee appreciated a bit and the USD-INR future closed 55.70.

On the technical side, the markets are still trading in the oversold zone and some of the indicators have shown some reversal signs, but since the rise has come on the back of short covering, not much has to be read in today's gains, on the other hand the positive aspect is that Nifty has managed to close above the crucial level of 4888. The levels to watch out for Nifty will be 4958, 4985 and 5041 on the upside and 4857, 4821 & 4793 on the downside.

On the international market front, the Asian markets have closed almost flat, and the European markets have closed on a strongly positive note, but the U.S. markets are trading in the red on the back of concerns about a Chinese slowdown and expectations of a worsening in Europe’s debt crisis. In the U.S., data showed companies placed fewer orders for computers, machinery and other capital equipment in April for a second month, indicating manufacturing in the U.S. is cooling. On the Energy futures front , both Brent and WTI crude are trading up by 1.12% and 1.31% at 106.74 & 91.08 $/bbl.

STOCK PICKS

Axis Bank - BUY 975-985. SL 950.TGT - 1010, 1023 & 1037

LT- BUY 1150-1160 SL  1130. TGT - 1181, 1195 & 1206

ICICI BANK- BUY 790 - 800. TGT - 833, 847 & 855