EUPHORIA

Once again the markets surprised everyone and just when everybody thought that the markets may be topping out, the markets surged through the roof, well that’s the way it is and once again shows the importance of sentiments in the markets. The benchmark indices opened on a strongly positive note, and gained strength as the session progressed and ultimately touched their intraday highs at the start of the second half of the trading session and from this point onwards the markets maintained their momentum and traded near their day’s high and closed for the week with phenomenal gains. The Nifty and Sensex closed, up by 137 & 404 points respectively for the week. The market breadth was extremely positive with 1057 advances to 467 declines. On the sectoral front, the Banking sector was the biggest gainer, followed by the Energy, FMCG and Metal sectors, while the IT sector was the biggest loser for the day. On the individual stocks front, Rel Infra, SAIL, Axis Bank, BHEL & Jindal Steel were the top five Nifty gainers for the day, while TCS, Dr. Reddy, Infosys & Sun Pharma were the top four Nifty losers for the day. On the institutional side, once again FIIs were net buyers to the tune of a massive 2328 crores, and the DIIs were net sellers to the tune of 1127 crores in the cash market.

On the derivatives side, strangely the FIIs were net sellers in both Index and Stock futures, to the tune of 409 and 345 crores respectively. Nifty future settled at 5707, with 16 points premium to the spot, along with a moderate increase in open interest. On the options side PCR fell to 0.98, along with a marginal increase in the India VIX by 1.66%. On the Call options side, the 5900 call added the maximum open interest, followed by the 5800 call, while there was uniform loss of open interest from the 4800 to 5700 calls. On the Put options side, the 5700 put added the maximum open interest, followed by the 5600, 5800 & 5500 puts. The entire activity in the cash as well as futures markets, indicate addition of fresh longs in the cash as well as futures, along with profit booking in the lower levels, on the options side.

On the technical side, Nifty closed above its July 2011 high and once again managed to close comfortably above the 5600 mark and with the strong support from the FIIs, coupled with strongly positive indicators from the F&O side, Nifty is trading above all its short and long term exponential moving averages, making a perfect scenario for another round of strong and sustained up-move, but as it becomes clear that this is a purely liquidity driven rally, it makes perfect sense to take stock or sector specific bets right now. The levels to watch out for Nifty, will be 5749 and 5807 on the upside and 5604, 5550 & 5517 on the downside. On the currency front, the Rupee closed at the highest level of the week at 53.27, buoyed by the strong rally in the domestic markets, on the back of governments resolve to go ahead with the reforms and the near month USD-INR future finally settled at 53.45 for the week.

On the international markets front, the Asian and the European markets closed with decent gains, while the U.S. markets closed almost flat after the data showed consumer spending almost stagnated. On the Energy futures front, the Brent crude oil future closed up by 1.26% at 111.42 $/bbl, while the WTI crude oil future closed up 0.51% at 92.89 $/bbl and the Natural Gas future closed up by 3.15% at 2.88 $/MMBtu.