WAIT AND WATCH

The markets opened on a flat note and continued to trade in the same range for the first 45 minutes of the trading session, but fell almost vertically from that point and touched their intraday lows, within the next few minutes. The markets traded in the same range till the end of the session and ultimately both the indices closed near their lowest point of the day. The Nifty and the Sensex closed, down by 38 and 120 points respectively. The market breadth was extremely negative with 514 advances to 943 declines. On the sectoral front, the Banking sector was the biggest looser, followed by the Pharma sector, while the rest of the sectors closed almost flat or marginally in the negative zone. On the individual stocks front, Bajaj Auto, Maruti, Asian Paint, TCS & JP Associate managed to outperform the markets. On the institutional side, the FIIs were net buyers to the tune of 178 crores, while the DIIs were net sellers to the tune of 64 crores in the cash market.

On the derivatives side, the FIIs were net buyers in both the Index and Stock Futures to the tune of 656 and 112 crores respectively. Nifty future settled at 5217 for the week, with 12 points premium to the spot, along with a considerable loss of open interest. On the Option side the PCR fell to 0.99 along with an increase in the India VIX by 3.11%. On the Call option side, the 5300 call added the maximum open interest, followed by the 5200 and 5400 calls, on the other the 5000 call lost the maximum open interest, followed by the 5500 call. On the Put option side, the 5200 put lost the maximum open interest, followed by the 5100, 5300 & 4900 puts. The entire activity in the F&O space indicates, liquidation of long positions on the futures side, along with some call writing at higher levels to take advantage of the sudden fall ahead of the future’s expiry week. Since there has been no addition of shorts ahead of the expiry, any major downside is very unlikely.

On the technical side, the Nifty could not breach the elusive mark of 5250, and somehow managed to close above the 5200 mark, after touching the intraday low of 5198 on falling volumes. Going forward the levels to watch out for Nifty will be 5230, 5255 and 5272 on the upside and 5192, 5179 & 5152 on the downside. On the currency front, the Rupee fell on Friday, snapping three successive weeks of gains as risk aversion, plumelled global risk assets such as the euro, and this sentiment will be the key for the rupee next week, although investors are also eyeing the possible policy reforms from the government, after the presidential elections, results are out on Sunday. The partially convertible rupee settled at 55.32 for the week, while the near month USD-INR future settled at 55.38 for the week.

On the international markets front the Asian, European and U.S. markets fell on Friday after Spain’s heavily indebted Valencia asked for financial aid, which raised fears that the Spanish government may ask for a full-blown bailout and the European Central Banks said it would stop accepting Greek bonds as collateral, adding to concerns about the Euro zone debt crisis. On the energy futures front, both the Brent and the WTI crude oil futures, cooled off a bit and finally settled at 106.83 & 91.83 $/bbl respectively for the week, while the Natural Gas future has closed, up by 2.73% at 3.08 $/MMBtu for the week.