CONSOLIDATION

The markets opened on a very dull note and continued making new lows as the session progressed and finally touched their intraday lows at the start of the second half of the trading session, but within the next half an hour, the markets dramatically recovered their entire losses and managed to enter the positive zone and touch their intraday highs and from this point onwards the markets followed a zig-zag path of alternatively moving in the positive and negative zone till the end of the session and ultimately both the indices closed almost flat for the week. The Nifty and the Sensex closed, down by 2.55 and 3 points respectively. The market breadth was very negative with 580 advances to 897 declines, On the sectoral front, the Banking sector was the biggest loser followed by the Auto and Pharma sectors, on the other hand, the FMCG sector was the biggest gainer followed by the IT and Energy sectors. On the individual stocks front, BPCL, Kotak Bank, Hind Unilever, Maruti & TCS were the top five Nifty gainers for the day, while State bank of India, Ranbaxy, Tata Motors, Bank of Baroda & IDFC were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of a mere 83 crores, while the DIIs were net sellers to the tune of 537 crores in the cash market.

On the derivatives side, the FIIs were net sellers in both Index and Stock futures to the tune of 21 and 625 crores respectively. Nifty future settled at 5345 for the week, along with a moderate increase in open interest. On the Options side, PCR increased to 1.12, along with a 1.59% fall in the India VIX. On the Call options side, the 5400 call lost the maximum open interest, followed by the 5200 & 5000 calls, while the 5600 call added the maximum open interest, followed by the 5300 & 5500 calls. On the Put options side, 5200 put added the maximum open interest, followed by the 5100 & 4900 puts, while the 5300 put lost the maximum open interest followed by the 4800 put. The entire activity in the cash as well as the F&O space, indicates mild profit booking on the options side but massive liquidation of longs both in the stocks and stock futures side, which led to the increase in premium on the Nifty futures side.

On the technical side, Nifty managed to hold on to the 5300 mark for the fourth consecutive session, albeit on falling volumes. The next up-move will happen, only if Nifty closes above the 5380 mark on rising volumes, but before that consolidation should take place above the 5300 mark for some more time, otherwise we may see 100 point correction before the next up-move happens. While there is no major threat to the markets right now, but the sustained selling by the DIIs may lead to weakening of the trend. On the currency front, the Rupee marginally fell on Friday on the back of pressure from global risk assets, but posted its first gain in last one month after the finance minister assured steps on fiscal consolidation. The rupee finally settled at 55.28, while the near month USD-INR future settled at 55.49 for the week.

On the international markets front, the Asian and European markets closed on a very weak note but the U.S. markets managed to close with decent gains as U.S government’s budget deficit narrowed on a Y-O-Y basis, dimming prospects for added monetary stimulus. On the energy futures front, the Brent & WTI crude futures closed marginally in the negative at   112.95 and 92.87 $/bbl respectively, while the Natural Gas future closed down by 5.94% at 2.77 $/MMBtu for the week.

On the technical side, Nifty managed to hold on to the 5300 mark for the fourth consecutive session, albeit on falling volumes. The next up-move will happen, only if Nifty closes above the 5380 mark on rising volumes, but before that consolidation should take place above the 5300 mark for some more time, otherwise we may see 100 point correction before the next up-move happens. While there is no major threat to the markets right now, but the sustained selling by the DIIs may lead to weakening of the trend. On the currency front, the Rupee marginally fell on Friday on the back of pressure from global risk assets, but posted its first gain in last one month after the finance minister assured steps on fiscal consolidation. The rupee finally settled at 55.28, while the near month USD-INR future settled at 55.49 for the week.