SCARY

The markets opened with a gap up, and continued to trade strongly in the positive zone till the start of the second half of the trading session, when they suddenly gave up all their gains and entered the negative zone. The markets continued to trade in a range for the next one hour, and ultimately broke down and touched the intraday low towards the end of the trading session. Both Nifty and the Sensex closed near the lowest point of the day, down by 45 and 157 points respectively. The market breadth turned extremely negative with 534 advances to 247 declines. On the sectoral front , the Banking sector was the biggest looser, followed by the FMCG, Energy and Metal sector. On the individual stock front, TCS, HCL TECH and Tata Motors bucked the trend. On the institutional side FIIs were net sellers to the tune of 283 crores, while the DIIs were net buyers to the tune of 208 crores in the cash market.

On the derivatives side the FIIs were net buyers in both Index and Stock futures, to the tune of 572 and 247 crores respectively. Nifty future closed at 4841, with 19 points discount to the spot, along with a considerable addition of open interest. On the Options side, PCR stayed the same at 0.88, along with a rise in the India VIX by 1.96%. On the Call options side, the 5000 call added the maximum open interest followed by the 4900 & 4800 calls, while the 5400 call lost the maximum open interest followed by the 5200 & 5100 calls. On the Put option side, the 4700 put added the maximum open interest, followed by the 4800 put, on the other hand 4900 put lost the maximum open interest followed by the 5100 and 5200 puts. The entire activity in the F&O space, indicates fresh shorts being initiated in the index futures, along with massive call writing happening at higher levels. It is clear that all the gains of the day, were erased by the shocking fall in the rupee, and suddenly the sentiment changed from optimism to despair. On the currency front, the rupee touched its all time low of 55.47 and the USD-INR future closed at 55.49.

On the technical side, Nifty touched almost touched, the intraday resistance of 4957 as well as broke the crucial level of 4888 and closed at the intraday support of 4861, indicating more downside in the days to come. The levels to watch out for Nifty will be 4927, 4950 & 4993 on the upside and 4820, 4795 & 4780 on the downside.

On the international market front , most of the Asian indices and the European indices have closed on a strongly positive note, while the U.S. markets are trading in the green on the back of mainly three factors (i)  U.S. housing data beat estimates. (ii) The China Securities Journal said the nation plans to speed up approval of infrastructure projects and allocate construction funding faster to improve growth. (iii) European Union leaders are preparing to gather in Brussels tomorrow to discuss how to revive growth.

On the energy futures front both Brent and WTI crude futures are trading by 0.26% and 1.08% at 108.53 & 91.57 $/bbl.

Stock Picks

Axis Bank - BUY 958 - 965. SL 943. TGT - 979, 993.