EDGY

The benchmark indices opened with a gap down, tracking their Asian peers and the market breadth gradually worsened as the session progressed and ultimately both the Indices closed at their lowest point of the week. The Nifty and the Sensex closed down by 69 & 212 points respectively. The market breadth was extremely negative with 358 advances to 1166 declines. On the sectoral front, there was across the sector selling, but the Banking sector was the biggest loser, followed by the Energy, Pharma & FMCG sectors. On the individual stocks front, there were hardly any gainers with TCS and Axis Bank barely managing to close in the green, while JP Associate, IDFC, Jindal Steel, Bharti Airtel & DLF were the top five Nifty losers for the day. On the institutional side, although there was hardly any participation, but surprisingly both, FIIs and DIIs were net buyers to the tune of 115 & 258 crores respectively in the cash market.

On the derivatives side, FIIs were net sellers in Index futures to the tune of 123 crores and net buyers in Index Options to the tune of 1014 crores, while they were net sellers in Stock futures and Options to the tune of mere 56 & 2 crores respectively. Nifty future settled at 5853 with just 5 points premium to the spot along with a massive loss of open interest. On the Options side, PCR stood at 0.91, along with a rise in the India VIX by 2.16%. On the Call options side, the 5900 call added the maximum open interest, followed by the 5800 & 6000 calls, while there was uniform loss of open interest from the 5000 to 5700 calls. On the Put options side, the 5700 put added the maximum open interest, while the 5900 put lost the maximum open interest followed by the 6000 & 5800 puts. The entire activity in the cash market was restricted to specific stocks, while on the F&O side, the sudden fall in the markets caused massive call writing at higher levels along with profit booking on the higher side of the market in the Put option side and the major action is shifting to the next series because the holiday shortened trading week has pushed the participants to start rolling over their positions, well in advance.

On the technical side, Nifty could not hold on to the 5900 level and succumbed to the selling pressure, but still there is no reason to worry, as  the rollovers  are healthy and still there are no major shorts in the system to create a severe market crash. The market direction over the next week will mainly be decided by the F&O rollovers and economic news from the international markets. The levels to watch out for Nifty, will be 5876 & 5905 on the upside and 5829, 5810 and 5782 on the downside. On the currency front, the Rupee hit a three week low in Friday as uncertainty over the U.S. fiscal cliff resolution dented demand for risk assets including domestic equities. The partially convertible rupee, finally closed at 55.06, while the near month USD-INR future settled at 55.19 for the week.

On the international markets front the Asian, European and the U.S. market have all ended deep in the red as uncertainty over resolution of the U.S. cliff still remains a  major factor, the effects of which were visible in the Energy futures market also where both Brent & WTI crude oil futures closed down  by 1.12 & 1.63% at 108.97 & 88.66 $/bbl respectively and the Natural gas future managed to close up by mere 0.32% at 3.45 $/MMBtu.