WAIT AND WATCH

The markets opened on a flat note but continued to trade with a positive bias throughout the entire trading session, but with just half an hour left for the end of the day’s session, the markets made a almost vertical ascent and closed near their day’s high. The Nifty and the Sensex closed up by 38 & 121 points respectively. The market breadth was evenly poised with 786 advances to 706 declines. On the sectoral front, the Energy sector was the biggest gainer, followed by the IT & FMCG sectors. On the individual stocks front, Reliance, ONGC, BPCL, WIPRO and Infosys were the top five Nifty gainers, while Sun Pharma, M&M, Tata steel,  State Bank of India & HDFC Bank were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of 833 crores, while DIIs were net sellers to the tune of 530 crores in the cash markets.

On the derivatives side, FIIs were net buyers in both Index Futures and Options to the tune of 219 and 1825 crores respectively, while they were net sellers in Stock futures to the tune of 152 crores and net buyers in Stock options to the tune of 108 crores. Nifty future settled at 5954 with  49 points premium to the spot, along with a marginal decrease in open interest. On the Options side, PCR stood at 1.16, along with a marginal decrease in India VIX by 0.80%. On the Call options side, the 6000 call added the maximum open interest followed by the 5900 & 5700 calls, while on the Put options side, the 5500 put added the maximum open interest, followed by the 5600, 5700 & 5400 puts. The entire activity in the Cash market was sector specific, while in the F&O side FIIs continued to add on to their long positions in the call options side, along with corresponding put writing at the lower levels of the market.

On the technical side, Nifty managed to close marginally above the 5900 mark, but it has been consolidating in the range of 5823 to 5965 for close to two weeks, and markets are eagerly waiting for a trigger to breakout of this range either on the upside or downside, depending on the various macro and microeconomic events about to unfold in the coming weeks. The levels to watch out for Nifty will be 5923 & 5942 on the upside and 5886, 5858 and 5827 on the downside. There are four major events about to unfold in the weeks to come (i) India will release current account data for July-September on Monday amid expectations of a record high deficit. (ii) Global risk factors will be key for Indian debt and FX markets as U.S. lawmakers continue negotiations over  the “fiscal cliff”. (iii) Hopes for interest rate cut will gather steam in the new year. (iv) RBI will issue the T-bill issuance calendar for the Jan-March quarter which will be closely watched to see whether RBI will  fund its extra borrowing with short term paper. On the currency front the partially convertible Rupee closed marginally up at 54.75, while the near month USD-INR future settled at 55.11 for the week.

On the international markets front, the Asian markets have closed on a modest note, but the European and the U.S. markets have close deep in the red as investors watches budget talks in Washington. On the Energy futures front, both the Brent and WTI crude oil futures, closed almost flat at 110.62 & 90.8 $/bbl respectively, while the Natural gas future closed up by 1.67% at 3.47 $/MMBtu.