CAUTION

The markets opened on a negative note, after two consecutive days of back to back rallies, and were clearly in a profit booking mode, ahead of the weekend and continued to trade with a negative bias throughout the trading session, but touched their intraday lows in the second half of the trading session, before making a almost V shaped recovery from this point onwards, to finally close in the positive zone. The Nifty and the Sensex closed, up by 19 and 70 points respectively. The market breadth also improved considerably by the end of the session, but finally closed on a negative note, with 690 advances to 750 declines. On the sectoral front, the FMCG sector was the biggest gainer, followed by the banking sector, on the other hand the IT sector was the biggest looser for the day. On the individual stock front, Rel Infra, Sterlite, Gail, LT and IDFC were the stocks which managed to buck the trend. On the institutional side, FIIs were net buyers to the tune of 202 crores, while the DIIs were net sellers, to the tune of a mere 81 crores in the cash market.

On the derivatives side, FIIs sold Index futures worth 163 crores, and brought stock futures worth 275 crores. Nifty future closed at 5059, with the discount narrowing down to, just 9 points to the spot, along with a moderate fall in open interest. On the Options side, the PCR fell to 1.10, along with a slight fall in the India VIX by 0.72%. On the Call options side, the 4900 call lost the maximum open interest, followed by the 5300 & 4800 calls, on the other hand the 5200 call added the maximum open interest. On the Put options side, the 5000 put added the maximum open interest, followed  by the 5100, 4500 & 4700 puts. The activity in the F&O space, indicate that the  recovery at the end was mainly due to short covering in the Index as well as the stock futures, but the better part was that, the FIIs were net buyers in the Index and stock futures. In the medium  term, the open interest position shows, Nifty will face considerable resistance in the 5100 - 5200 range.

On the technical side, Nifty managed to close above, yet another psychological mark of 5050 and at the same time it has managed to close above most of its short term moving averages on a daily basis ,but very shortly the markets are about to enter the overbrought zone. On the weekly charts, a lot needs to be done , before this up-move really becomes a trend. Going forward the levels to watch out for Nifty, will be 5103, 5138 & 5150 on the upside, and 5000, 4967 & 4946 on the downside. On the currency front, the Rupee depreciated once again and the USD-INR future closed at 55.66 for the week.

On the international market front, the Asian and the European markets closed on a negative note, while the U.S.markets closed on a firm note for the week, but the real problem that has cropped up is Spain, which has become the biggest euro economy, so far to seek international aid of 125 billion USD , to rescue its banking system and the markets will react favourably tomorrow if suitable policy action is taken. On the energy futures front, both Brent and WTI crude futures have closed at 99.47 & 84.10 $/bbl for the week, while Natural gas futures managed to recover some of their losses and closed at 2.29 $/Mmbtu. On the precious metal front, Gold managed to close almost flat at 1591.40 $/t.oz, while Silver closed marginally down at 28.47 $/t.oz for the week.