CONSOLIDATION

The markets opened with a gap down, tracking their Asian peers and continued to trade with a strong negative bias and gradually weakened with the progressing session, but the situation turned worse, at the start of second half of the trading session, when the markets started falling almost vertically and touched their intraday lows within the next one hour of the trade, from that point onwards the markets tried to recover some of their losses, but ultimately both the indices closed near their lowest point of the day. The Nifty and the Sensex closed down by 39 and 129 points respectively. The market breadth was extremely negative, with 546 advances to 942 declines. On the sectoral front, the FMCG sector was the biggest loser, followed by the Energy, Auto & Banking sectors. On the individual stocks front, only LT & Kotak Bank managed to outperform the markets. On the institutional side, the FIIs were net buyers to the tune of a mere 84 crores while the DIIs were net sellers to the tune of 357 crores in the cash market.

On the derivatives side, the FIIs were net sellers in both the Index and Stock futures, to the tune of 151 and 422 crores respectively. The Nifty future finally settled at 5323, with 17 points premium to the spot, along with a moderate fall in open interest. On the options side, the PCR marginally increased to 1.17, along with a increase in the India VIX by 3.14%. On the Call options side, the 5500 call lost the maximum open interest, followed by the 5600 & 5200 calls, while the 5400 call added the maximum open interest followed by the 5200 call. On the Put options side, the 4900 put lost the maximum open interest, followed by the 5300 & 5200 puts, while the 5100 put added the maximum open interest, followed by the 5000 and 4800 puts. The activity in the cash as well as the F&O space indicates liquidation of longs in the Index futures as well as the cash positions ahead of the IIP figures to be declared tomorrow.

On the technical side, Nifty managed to hold on to the critical level of 5300 and closed, with decreasing volumes. The Nifty is trying to consolidate around the 5250 level since the phenomenal rise on the 29^th of the last month, and it has maintained this level since the last seven trading sessions. It seems to be a prelude for the next higher move, provided there are no major setbacks at the micro and macro levels of the economy. The levels to watch out for Nifty, will be 5328, 5350 and 5364 on the upside, and 5292, 5278 & 5260 on the downside. On the currency front, the Rupee fell on the back of tracking weaker global assets such as the Euro, but large dollar sales by custodian banks helped, support the domestic currency. The rupee finally settled at 55.91, while the near month USD-INR future finally settled at 55.65 for the day.

On the international markets front, the Asian and the European markets have closed almost flat, while the U.S. markets are trading on a mixed note, amid concerns on the earnings front and anticipation of further stimulus measures ahead of the minutes of last month’s Federal Reserve meet on the other hand there has been a marginal improvement in the trade data. On the energy futures front, both Brent and WTI crude futures are trading with considerable gains at 99.95 and 85.97 $/bbl respectively after the data showed a unexpected fall in the weekly U.S. crude oil inventories, while the Natural gas future is also trading on a firm note at 2.79 $/MMBtu.