CAUTIOUS

The markets opened on a very flat note, and continued to trade range-bound, with a negative bias till the first hour of the second half of the trading session, but at that very juncture, the news of withdrawal of fertilizer subsidy and assurance from the finance minister regarding more steps to achieve fiscal prudence, hit the markets, which gave the markets the much needed fillip, and post that event the markets made a almost vertical ascent and ultimately both the indices, closed near their highest point of the day. The Nifty and the Sensex closed, up by 56 & 174 points respectively. The market breadth also turned positive with 922 advances to 565 declines. On the sectoral front, the Banking sector was the biggest loser, followed by the FMCG, Metal and IT sectors. On the individual stocks front, JP Associate, DLF, PNB, Bank of Baroda and BHEL were the top five Nifty gainers, while Lupin, Cipla, Wipro, Maruti & Ultratech Cement were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of 1043 crores, while the DIIs were net sellers to the tune of 573 crores in the cash market.

On the derivatives side, FIIs were net sellers in both Index and Stock futures, to the tune of 126 & 312 crores respectively. Nifty future settled at 5739, with a massive premium of 31 points to the spot, along with a marginal decrease in open interest. On the Options side, the PCR stood at 1.0, along with a fall in the India VIX by 2.02%. On the Call options side, the 5800 call added the maximum open interest, followed by the 5900 & 5500 calls, while there was a uniform loss of open interest from the 5000 to 6000 calls. On the Put options side, the 5600 put added the maximum open interest, followed by the 5700 and 5800 puts, while the 5500 put lost the maximum open interest, followed by the 5400 & 5300 puts. The entire activity in the cash as well as the F&O markets indicates sector specific buying in the cash markets along with profit booking in the Index futures and options. There was also selective addition of longs on the higher side in the call options, and put writing on the higher side of the market.

On the technical side, after a day’s gap once again Nifty managed to close above the 5700 mark with marginal increase in volumes. Nifty made a top of 5815 on 5^th October 2012, and since then, it has been stuck between 5650 and 5700 levels for the last four sessions, on very thin volumes and the reduced activity in the F&O markets suggest Nifty is in a indecision period and it may take longer than expected to take out the 5800 mark. The levels to watch out for Nifty, will be 5740 and 5773 on the upside and 5655, 5631 & 5575 on the downside. On the currency front, the Rupee snapped it four day losing streak, boosted by dollar sales from exporters and a late rebound in the domestic stock markets, which brought some foreign fund inflows. The Rupee finally closed at 52.68, while the near month USD-INR futures settled at 52.74 for the day.

On the international markets front, the Asian markets have closed on a mixed note, while the European markets have closed on a very strong note and the U.S. markets are trading almost flat with a positive bias as American jobless claims fell to a four year low and Italy’s bond yields fell after a debt sale. On the Energy futures front, the Brent and WTI crude oil futures are trading up, by close to a percent at 115.31 & 91.97 $/bbl respectively , even after a more than expected weekly increase in the U.S. crude oil inventories while the Natural gas future is trading up 3.22% at 3.58 $/MMBtu, after a unexpected fall in the weekly U.S. natural gas inventories.