SURPRISE

Unexpectedly the markets opened on a mildly positive note, tracking their Asian peers and gained strength as the session progressed. The markets touched their intraday highs within the first half of the trading session, but slowly started loosing their momentum and subsequently touched their intraday low, in the second half of the trading session, but eventually recovered some of their losses at the fag end of the trading session, to close almost flat. The Nifty and the Sensex closed up by 15 and 32 points respectively. The market breadth stayed marginally positive, till the end of the session with 784 advances to 657 declines.On the sectoral front, the Banking sector turned out to be the biggest gainer, while the FMCG sector was the biggest looser. On the individual stock front, LT, Grasim, RelInfra, IDFC & Cairn were the star performers of the day. On the institutional side, the FIIs were net sellers to the tune of 680 crores, while the DIIs were net buyers to the tune of 795 crores in the cash market.

On the derivatives side, surprisingly the FIIs turned net buyers in both the Index and Stock futures, to the tune of 286 and 279 crores respectively.Nifty future closed at 4846, with the discount once again widening to 17 points to the spot, along with a slight fall in open interest. On the options side the PCR fell to 0.94, along with a rise in the India VIX by 2.58%. On the Call option side, the 5000 call added the maximum open interest, followed by the 4900 & 5100 calls, while on the Put option side, the 4800 put added the maximum open interest, followed by the 4900 and the 4700 puts. The entire activity in the F&O space, indicates, some amount of short covering on the futures side, along with massive call writing at higher levels. The FIIs are constantly reducing their positions in the cash markets along with a corresponding build up in the future positions, which once again validates the fact, that every rise is used as a opportunity to exit the market.

On the technical side, Nifty breached the intraday resistance of 4880, and made a high of 4898, but could not close above the crucial mark of 4888. The technical indicators on the daily as well as the weekly charts , do not show any signs of  reversal, which is validated by the data from the F&O space. The levels to watch out for Nifty will be, 4891, 4903 & 4942 on the upside and 4840, 4818 & 4799 on the downside. On the currency front, the Rupee depreciated marginally and the USD-INR future closed at 55.89 for the day.

On the international markets front, the Asian markets have closed on a strongly positive note, while the European markets have closed in the red, but the U.S. markets are trading in the green as equities reversed early losses today as the Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90 percent of the economy, rose to 53.7 last month from April’s 53.5. On the energy futures front, the Brent and WTI crude futures are trading almost flat with a negative bias at 98.74 & 83.94 $/bbl respectively.