ALARMING

The markets opened with a gap down, tracking their Asian peers and continued to trade with a strong negative bias, throughout the session and ultimately touched their lowest point of the day at the start of the second half of the trading session, the markets could hardly recover, any of their losses and ultimately both the indices closed on a very negative note. The Nifty and the Sensex closed down by 42 and 129 points respectively. The market breadth was extremely negative with 442 advances to 1047 declines. On the sectoral front, the Midcap sector was the biggest looser, followed by the Banking and the Pharma sectors. On the individual stocks front, only DLF & TCS manage to outperform the markets for the day. On the institutional side, the FIIs were net buyers to the tune of 253 crores, while the DIIs were net sellers to the tune of 288 crores in the cash market.

On the derivatives side, FIIs brought Index futures, worth 65 crores and sold Stock futures worth 308 crores. Nifty future closed at 5279, with just 4 points premium to the spot, along with a considerable loss of open interest, for the second consecutive session. On the Options side the PCR marginally fell to 0.98, along with a rise in the India VIX by 3.77%. On the Call options side, the 5300 call added the maximum open interest, followed by the 5400 & 5200 calls, while the 5600 call lost the maximum open interest, followed by the 5100 call. On the Put options side, the 4900 put lost the maximum open interest, followed by the 4700, 4800, 5500 & 5400 puts, while the 5200 put added the maximum open interest followed by the 5100 put. The entire activity in the cash and F&O space indicates unwinding of longs particularly on DII side, while the FIIs are still long in the cash as well as futures side.

On the technical side, Nifty finally broke the 5300 level after three consecutive sessions, with slight decrease in volumes, but still managed to close above its intraday support of 5255. Although two consecutive falls do not suggest a downtrend, but sustained unwinding of longs for one more session may change the market trend very fast. The levels to watch out for Nifty will be 5298 & 5321 on the upside, and 5254, 5233 & 5210 on the downside. On the currency front, the Rupee fell for the fourth straight session and finally settled at a 1 week low of 55.92, while the USD-INR future settled at 56.13 for the day.

On the International markets front, the Asian and the European markets have closed deep in the red, while the U.S. markets are also trading with losses, after a rally in Spanish bond yields above 7%, intensified concern about Europe’s crisis. On the energy futures front, both the Brent and the WTI crude futures are trading with considerable gains at 100.41 & 86.07 $/bbl respectively, and the Natural gas future is also trading up by 3.08 % at 2.86 $/MMBtu.