HESITANT

As expected, the markets opened on a very flat note in the backdrop of domestic political uncertainty and traded range-bound, with a negative bias throughout the day and ultimately both the indices closed with moderate losses for the day. The Nifty and the Sensex closed, down by 10 and 46 points respectively. The market breadth was positive with 922 advances to 579 declines. On the sectoral front, the Banking sector was the biggest gainer, followed by the Midcap and FMCG sectors on the other hand Energy sector was the biggest loser followed by the IT sector. On the individual stocks front, PNB, BHEL, State Bank of India, GAIL and Bank of Baroda were the top five Nifty gainers for the day while Wipro, Cairn, TCS, Hindalco & Reliance Industries were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of 1049 crores, while the DIIs were net sellers to the tune of 671 crores in the cash market.

On the derivatives side, FIIs were net buyers in both Index and Stock futures to the tune of 114 & 629 crores respectively. Nifty future settled at 5612, with just 12 points premium to the spot along with a moderate increase in open interest. On the options side, the PCR stood at 1.18, along with a marginal increase in the India VIX by 0.28%. On the Call options side, except the 5700 & 5800 calls which added the maximum open interest, there was uniform loss of open interest from the 4800 to 5600 calls. On the Put options side, the 5500 put added the maximum open interest, followed by the 5400 & 5600 puts, on the other hand the 5200 put lost the maximum open interest, followed by the 5300 & 5000 puts. The entire activity in the cash as well as the F&O markets indicates some level of profit booking along with sector specific creation of longs in the cash as well as the F&O markets.

On the technical side, somehow Nifty managed to close at the 5600 mark for the second consecutive session with slight fall in volumes, because of lack of participation from the market participants owing to the political uncertainty, but still Nifty is trading near it seven month high and has managed to close above all its short and long term exponential moving averages, coupled with strong open interest buildup on the futures side, there are more chances of Nifty touching new highs in the days to come, provided the government sticks to its path of fiscal prudence and does not succumb to political and populist compulsions. The levels to watch out for Nifty will be 5636 & 5659 on the upside and 5584, 5568 & 5550 on the downside.On the currency front, the Rupee closed unchanged yesterday, after two sessions of gains, although investors remained bullish on the back of the governments new reforms push. The Rupee finally settled at 54.01, while the near month USD-INR future settled at 54.04 for the day.

On the international markets front, the Asian markets had closed yesterday on a positive note, but the European and U.S. markets had closed with moderate losses, but today the scenario is quite different, the Asian and the European markets have closed on a strongly positive note and the U.S. markets are also trading with a positive bias on the back of better than expected  U.S. home sales data and Bank of Japan’s increased asset purchase target, seeking to avoid a further slowdown in the world’s third largest economy.

On the Energy futures front, both the Brent and WTI crude oil futures are trading down by close to 4 percent after an unexpected rise in weekly U.S. crude oil inventories at 107.78 & 91.88 $/bbl respectively, while the Natural gas future is trading almost flat at 2.77 $/MMBtu.