BREAK OUT

The benchmark indices opened on a flat note, but gradually gained momentum and traded with a strong positive bias throughout the day, but with just one hour left for the end of the day’s session, the markets made a almost vertical ascent and touched their intraday highs and ultimately both the indices closed near their highest point of the day. The market breadth which was evenly balanced throughout the day, turned positive with 815 advances to 673 declines. On the sectoral front, the IT sector was the biggest gainer, followed by the Energy, Auto, Banking and FMCG sectors. On the individual stocks front, Sterlite, Sesa Goa, DLF, NTPC & Ambuja Cement were the top five Nifty gainers for the day, while Bharti Airtel, Hindalco, PNB, Cairn & Hero Motocorp were the top five Nifty losers for the day. On the institutional side, strangely there was very little activity with FIIs turning net buyers to the tune of a mere 141 crores, while the DIIs were net sellers to the tune of 142 crores in the cash market.

On the derivatives side, the story was same with FIIs turning net buyers in both Index and Stock futures to the tune of 264 & 19 crores respectively. Nifty future settled at 5442, with 21 points premium to the spot, along with a considerable addition of open interest. On the Options side, PCR increased to 1.25, along with a increase in the India VIX by 3.62%. On the Call options  side, the 5300 call lost the maximum open interest, followed by the 5200 & 5400 calls, while the 5500 call added the maximum open interest. On the Put options side, the 5400 put added the maximum open interest, followed by the 5300, 5500 & 5200 puts. The entire activity in the cash as well as the F&O markets indicates addition of fresh longs, along with profit booking on the call options side and put writing at higher levels to hedge the long positions.

On the technical side, Nifty finally managed to break the 5300 range and comfortably closed above the 5400 mark, with slight increase in volumes. As suggested in the last report, finally the much expected up-move has happened after a good consolidation and much of it will depend on the newsflow and international market trends over the next few sessions. The levels to watch out for Nifty will be 5441, 5465 & 5498 on the upside and 5384, 5347 & 5327 on the downside. On the currency front the Rupee strengthened to its highest level in more than a week, on the back of gains in the domestic equity markets and Euro and also lack of dollar demand from the oil firms. The rupee finally settled at 55.56 while the near month USD-INR future settled at 55.58 for the day.

On the international markets front, the Asian markets have closed on a very flat note, while the European markets have closed with decent gains, and the U.S. markets are trading with minor losses. On the energy futures front, the Brent crude oil futures climbed to a three month high on speculation that the European leaders will make progress in resolving the region’s debt crisis this week. The Brent and WTI crude oil futures are trading with gains close to a percent, at 114.67 & 97.15 $/bbl respectively, while the Natural gas future is also trading up by 1.37% at 2.81 $/MMBtu.