DOWNTREND

To everyone’s surprise, the markets opened on a fairly positive note and continued to trade with a positive bias till the first hour of the second half of the trading session, but from this point onwards the markets started falling, but the ferocity of the fall, caught everyone by surprise and with just half an hour left for the end of the session, the markets touched their intraday lows and ultimately both the indices closed near the lowest point of the day. The market breadth also turned negative till the end of the session with 537 advances to 986 declines. The Nifty and the Sensex closed, down by 39 and 136 points respectively. On the sectoral front, the Banking sector was the biggest loser, followed by the Midcap, Energy, Pharma & Infra sectors. On the individual stocks front, Axis Bank, Maruti, Hero Motocorp, Bharti Airtel & Cairn were the top five Nifty gainers of the day, while DLF, M&M, ACC, Tata Motors & Rel Infra were the top five Nifty losers for the day. On the institutional side, FIIs were net sellers to the tune of 204 crores, while DIIs were net buyers to the tune of 595 crores in the cash market.

On the derivatives side, FIIs were net sellers in both Index and Stock futures to the tune of 133 & 151 crores respectively. Nifty future settled at 5652, with just 4 points premium to the spot, along with a considerable loss of open interest. On the Options side, PCR fell to 0.86, along with a fall in the India VIX by 2.08%. On the Call options side, the 5700 call added the maximum open interest, followed by the 5800 call, while the 5900 call lost the maximum open interest, followed by the 6000 call. On the Put options side, the 5700 put lost the maximum open interest, followed by the 5800, 5400 & 5300 puts, while the 5500 put added the maximum open interest. The entire activity in the Cash as well as the F&O space, indicates little participation of FIIs in the cash as well as the F&O markets, along with unwinding of longs in Index futures and call writing on the higher side of the market range.

On the technical side, Nifty continued its struggle to cross the 5700 mark, but closed at the lowest level in the last seven sessions, with a big spike in volume and as suggested, in the last article, it touched its major support level of 5640 today. The downtrend is clearly established now and Nifty will continue make new lows, with intermittent spikes due to favorable news from the international markets. The levels to watch out for Nifty, will be, 5696 and 5704 on the upside and 5617, 5592 & 5565 on the downside. On the currency front, the Rupee snapped its two day losing streak as demand for global risk assets was bolstered by better than expected U.S and German economic indicators and speculation that Spain may soon ask for a bailout. The Rupee finally closed at 52.87, while the USD-INR future settled at 52.98 for the day.

On the international markets front, the Asian and the European markets have closed on a fairly positive note and the U.S. markets are also trading on a very strong note, on the back of a more than forecasted rise in industrial production and corporate earnings which topped the estimates. On the Energy futures front, both the Brent and WTI crude futures are trading down by, 0.37 & 0.10% at 113.97 & 92.19 $/bbl respectively and the Natural Gas future is also trading down by 1.65% at 3.42 $/MMBtu.