TURBULENCE

The markets opened with a gap down, tracking its Asian peers and traded for the entire day, with a strong negative bias and by the time the European markets opened, things became worse and  the Nifty reached very close, to the the intraday support of 4834 and ultimately both Nifty and the Sensex closed down by 84 and 298 points respectively. The market breadth was extremely negative with 388 advances to 1075 declines. There was across the sector selling, but the biggest looser was the Banking sector, followed by the FMCG, Auto and  the IT sectors. However BPCL, Power Grid and CAIRN were the few stocks, which bucked the trend. On the institutional side, FIIs were net sellers to the tune of, a massive 547 crores, while the DIIs were net buyers to the tune of, merely 172 crores in the  cash market.

On the derivatives side, the FIIs sold Index futures worth 756 crores and brought Stock futures worth 92 crores. Nifty future closed at 4857, with 1 point discount to the spot, along with a moderate increase in open interest. On the options side PCR was marginally down to 0.94, along with a jump in the India VIX by 6.42%. On the Call options side, the 4900 call added the maximum open interest, followed by the 4800 & 5000 calls, while the 5200 call lost the maximum open interest, followed by the 5400 & 5300 calls. On the Put options side, the 4900 put lost the maximum open interest, followed by the 5000 & 4800 puts. The activity in the F&O space indicates massive call writing, happening at the lower levels , which is a indicator of more shorts building up in the system and ultimately creating more downward pressure on the markets.

On the technical side, Nifty has breached another crucial level of 4900, and there seems to be no let-off in the selling pressure. Inspite of all the indicators in the oversold zone , the market is trending downwards. The levels to watch out for Nifty will be 4881, 4904 and 4926 on the upside and 4836, 4814 and 4791 on the downside. On the currency front the rupee depreciated further and touched the all time low of 54.52 and the USD-INR future closed at 54.64.

On the international market front, the Asian markets have closed deep in the red, while the European markets recovered some of their losses and ended almost flat, and the U.S. markets are trading in the green on the back of better- than-estimated reports on housing starts and industrial production, which bolstered confidence in the world’s largest economy. On the energy futures front, both Brent and WTI crude futures are trading down by 0.83% at 110.53 & 93.21 $/bbl respectively.