DESPAIR

The markets opened with a gap down and drifted downwards throughout the session and ultimately closed near their lowest point of the day. It was the biggest percentage fall, since Mid-May, as investors booked profits in the recently outperforming sectors, after global risk aversion hammered Asian shares and growing concerns among domestic investors that the government may not be able to deliver substantial policy reforms after last week’s presidential elections. The Nifty and the Sensex closed, down by 87 and 281 points respectively. The market breadth was extremely negative with 360 advances to 1132 declines. On the sectoral front, there was across the sector selling, but the Banking sector was the biggest loser, followed by the FMCG, Midcap, Metals & Auto sectors. On the individual stocks front, only Dr. Reddy's, Cipla & ONGC managed to outperform the markets. On the institutional side, the FIIs were net buyers to the tune of mere 109 crores, while the DIIs were net sellers to the tune of 354 crores in the cash market.

On the derivatives side, the FIIs were net sellers, both in the Index and Stock futures, to the tune of 488 and 312 crores respectively. Nifty future settled at 5120, with just 2 points premium to the spot, along with a massive loss of open interest. On the Options side, the PCR fell to 0.85, along with a huge jump in the India VIX by 10.48%. On the Call option side, the 5200 call lost the maximum open interest, followed by the 5100 call. On the other hand the 5400 call lost the maximum open interest, followed by the 5300 & 5500 calls. On the Put option side, the 5200 put lost the maximum open interest, followed by the 5300 put. On the other hand the 5000 put added the maximum open interest, followed by the 4800 & 4900 puts. The entire activity in the cash as well as the F&O space indicates massive unwinding of longs along with opportunistic call and put writing, just ahead of the expiry, but the massive jump in the volatility levels, doesn’t augur well for this nervous market.

On the technical side, Nifty has breached the crucial support of 5150, but on falling volumes. Nifty has closed below most of its long and short term moving averages, and much of the direction will depend on the news flow from the domestic and international front. Going forward the levels to watch out for Nifty will be, 5149 & 5178 on the upside, and 5096, 5074 & 5040 on the downside and with all the major technical indicators on the daily as well as the weekly charts in sell mode. It would be safe, to take positions only if the markets show reversal signs over the next three or four sessions. On the currency front, the Rupee fell the most in a month, as risk assets got plumelled, sending the euro sharply lower against most currencies, but the Rupee found major support from large dollar sales by a petrochemical company. The rupee finally settled at 55.96, while the near month USD-INR future settled at 56.05 for the day.

On the international market front, the story was the same with the Asian and the European markets hammered down mercilessly, and the U.S. markets are also trading the same way. On the energy futures front, both the Brent and WTI crude futures are trading down by 2.5 % at 104.39 & 89.58 $/bbl respectively, while the Natural Gas future is trading almost flat at 3.07 $/MMBtu.