INFLECTION POINT

The benchmark indices opened on absolutely flat note and continued to trade rangebound with negative bias for most of the first half of the trading session, but towards the end of the first half and the start of the second half of the trading session the markets made a almost vertical ascent on the back of better than expected inflation data and hopes of RBI’s action in the near term. The market breadth started improving with passing time and ultimately both the indices closed at their highest points of the day. The Nifty and the Sensex closed up by 28 & 88 points respectively. The market breadth also improved considerably and ended up almost marginally negative with 720 advances to 777 declines. On the sectoral front, the Banking sector was the biggest gainer followed by the Metals and IT sectors. On the individual stocks front, Sesa Goa, Hindalco, Bank of Baroda, Jindal Steel & State bank of India were the top five Nifty gainers, while Power Grid, Bharti Airtel, JP Associate, BHEL & Dr. Reddy were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of 574 crores while the DIIs were net sellers to the tune of 512 crores in the cash market.

On the derivatives side, FIIs were net sellers in Index & Stock futures to the tune of 134 & 22 crores respectively while they were net buyers Index & stock options to the tune of mere 15 & 9 crores respectively. Nifty future settled at 5914 with 35 points premium to the spot along with a marginal decrease in open interest. On the Options side, PCR stood at 0.98, along with a fall in the India VIX by 3.26%. On the Call options side, there was uniform loss of open interest from the 5000 to 6000 calls, while on the Put options side, the 5800 put added the maximum open interest, followed by the 5900 & 5600 puts. The activity in the cash market was again sector specific, while in the F&O space there was profit booking on the Call options side, along with a corresponding put writing at higher levels.

On the technical side, although Nifty has not been able to break the 5900 barrier for the last three sessions, there has been relatively no addition of short positions. The future course of markets will be decided by the major reform decisions to be taken by the government and RBI’s monetary policy meet. The levels to watch out for Nifty will be 5897, 5915 & 5939 on the upside and 5850, 5817 & 5778 on the downside. On the currency front, the Rupee fell to its lowest level in over a week on Friday after heavy dollar buying by a large state run bank wiped out all gains even as a below expected inflation reading raised hopes that the central bank could start cutting interest rates.

On the international markets front, the Asian markets closed on a mixed note, and the European markets closed on a flat note, while the U.S. markets have closed with marginal losses. On the energy futures front, both the Brent and WTI crude oil futures have closed up by 1.62 & 0.98% at 108.18 and 86.73 $/bbl respectively, while Natural Gas future closed down by 0.99% at 3.31 $/MMBtu.