CARNAGE

As expected, the markets opened on a negative note in the aftermath of worst than expected domestic GDP figures, due to policy paralysis on the part of the government. After the initial two hours of the trading session, the situation turned worse, and the markets headed straight for a downward journey, and could not recover any of the losses, and both the indices closed at their lowest level, till the end of the session. The Nifty and the Sensex closed down by 83 and 253 points respectively. The market breadth was extremely negative with 376 advances to 1092 declines. There was across the sector selling, but the biggest looser was the Banking sector, followed by the Energy, Midcap and IT sectors, on the other hand, FMCG was the only sector, which survived the onslaught. On the individual stocks front, only ITC & GAIL, managed to buck the trend. On the institutional side, the FIIs were net sellers to the tune of 220 crores, while the DIIs were net buyers to the tune of 205 crores in the cash market.

On the derivatives side, FIIs were net sellers in Index futures, to the tune of 496 crores and net buyers in Stock futures to the tune of 123 crores. Nifty future closed at 4825, with 16 points discount to the spot, along with a considerable addition of open interest. On the options side PCR, marginally fell to 1.05, along with a rise in the India VIX by 1.52%. On the Call option side, the 5000 call added the maximum open interest, followed by the 5100, 4900 & 4800 calls. On the Put option side, the 5000 put lost the maximum open interest, followed by the 4900 & 5100 puts, on the other hand the 4700 put added the maximum open interest, followed by the 4800 put. The entire activity in the F&O space,  indicates shorting of Index futures as well as massive call writing at higher levels, which will act as major resistance levels, in case of a pullback.

On the technical side, Nifty has once again breached the crucial level of 4888, and somehow managed to close near the intraday support of 4852, but all the indicators on the daily and weekly charts are strongly in sell mode. Going forward, as suggested last month, the possibility of the markets testing the Dec. 2011 lows, seems to be a reality now. The levels to watch out for Nifty will be 4910 & 4960 on the upside and 4810, 4771 & 4712 on the downside. On the currency front, the Rupee  appreciated slightly and the USD-INR future closed at 56.10, for the day.

On the international markets front, the Asian, European and the U.S. markets have also ended, deep in the red, namely due to the following factors, (i) Decline in the monthly employment figures and data showing the U.S. economy grew more slowly in the first quarter than previously estimated. (ii) A gauge of manufacturing in the euro zone dropped to a three-year low. (iii) China’s Purchasing Managers’ Index showed the weakest production growth since December. 

(iv) Europe’s debt crisis intensified as investors focused on Spain’s finances and Greece’s ability to remain in the euro region.

On the energy futures front, both the Brent and WTI crude futures closed with a massive fall of 3.38 & 3.81 % at 98.43 and 83.23 $/bbl respectively for the week.