AFFIRMATIVE

The benchmark indices opened on a flat note, and continued to trade in the same range throughout the day but with just one hour left for the end of the session, the markets made a almost vertical ascent and managed to close near the highest point of the day. The Nifty and the Sensex closed, up by 28 and 76 points respectively. The market breadth which remained negative throughout the day, dramatically improved and managed to close in the positive with 810 advances to 672 declines. On the sectoral front, the Energy sector was the biggest gainer followed by the Banking and Infra sectors. On the individual stocks front, HDFC, DLF, RelInfra, Sterlite and Sesa Goa were the top five Nifty gainers for the day, on the other hand Tata Motors, Hind Unilver, Hindalco, Hero Motocorp & Tata Steel were the top five Nifty losers for the day. On the institutional side, the FIIs were net buyers to the tune of 340 crores, while the DIIs were net sellers to the tune of 176 crores in the cash market.

On the derivatives side, the FIIs were net sellers in both Index and Stock Futures to the tune of 28 and 442 crores respectively. Nifty future settled at 5372, with 24 points premium to the spot, along with a considerable increase in premium. On the Options side, the PCR increased to 1.25, along with a marginal fall in the India VIX by 0.35%. On the Call options side, the 5400 call lost the maximum open interest, followed by the 5200 & 5100 calls, on the other hand the 5600 call added the maximum open interest. On the Put options side, the 4800 put lost the maximum open interest, followed by the 4700 & 5000 puts , while the 5300 put added the maximum open interest, followed by the 5200 and 4900 puts. The entire activity in the cash as well as the futures side, indicates creation of fresh longs along with profit booking and hedging of long positions on the options side. The buy figures of FIIs in the cash market along with the sell figures in the Stocks future, seems to be a contradiction, but actually it is a search for the equilibrium point, which is driving the future price towards fair valuation.

On the technical side, Nifty has once again managed to close comfortably above the 5300 mark, along with slight increase in volumes and as suggested yesterday, the markets are consolidating at these levels and making a valid case for a strong up-move, provided there are no major setbacks from the international front. The levels to watch out for Nifty will be 5369, 5379 & 5406 on the upside and 5320, 5293 & 5263 on the downside. On the currency front, the Rupee fell on the back of sustained dollar demand from oil importers, and caution on the part of traders regarding the economy, which could face a period of slowing growth but high inflationary pressures. The rupee finally settled at 55,34, while the near month USD-INR future settled at 55.42 for the day.

On the international market front the Asian and the European markets have closed in the red and the U.S. markets are also trading in the red as Japan’s economy grew less than forecast and Bank of America cut its outlook for Chinese growth. On the energy futures front, the Brent crude future is trading up by 0.92 % at 112.14 $/bbl, while the WTI crude future is trading marginally up at 92.98 $/bbl and the Natural gas future is trading down by 0.56% at 2.75 $/MMBtu.