NERVOUS

The markets opened on a mildly positive note on the back of threat of a possible downgrade by the prominent rating agencies, and traded in a narrow range till the start of the second half of the trading session, but from this point onwards the markets entered the negative zone and with just half an hour left for the end of the day’s session, the news that the government might sell diesel to cement and power companies at market rates hit the markets and the markets fell almost vertically within the next ten minutes and ultimately both the indices closed near their lowest points of the day. The Nifty and the Sensex closed down by 30 and 76 points respectively. The market breadth also worsened considerably and ultimately closed on a negative note with 600 advances to 923 declines. On the sectoral front, the FMCG sector was the biggest loser followed by the IT & Metal sectors. On the individual stocks front, Tata Motors, Gail, BPCL, State Bank of India & Bharti Airtel were the top five Nifty gainers while BHEL, Ultratech Cement, Tata Steel, Ambuja Cement & ITC were the top five Nifty losers for the day. On the institutional side, FIIs were net buyers to the tune of 849 crores and DIIs were net sellers to the tune of 518 crores in the cash market.

On the derivatives side, there was hardly any activity with FIIs turning net sellers in Index futures to the tune of mere 15 crores and net buyers in Index options to the tune of 94 crores, while they were net sellers in both Stock futures and Options to the tune of 188 and 85 crores respectively. Nifty future settled at 5999 with just 28 points premium to the spot along with a marginal loss of open interest. On the Options side PCR stood at 0.90, along with a marginal increase in the India VIX by 0.38%. On the Call options side, the 6100 call added the maximum open interest, followed by the 6200 call, while there was uniform loss of open interest from the 5000 to 5800 calls. On the Put options side, the 5900 put added the maximum open interest, followed by the 5800 put, while there was uniform loss of open interest from the 5000 to 6200 puts. The entire activity in the Cash market was stock specific, while on the F&O side profit booking continued in the Index futures and options side and the sudden fall in the market prompted the market participants to go short on the higher side of the market.

On the technical side, as mentioned day before yesterday, that the uptrend might not be sustainable, if there is no meaningful pullback, and that is exactly what happened and the Nifty came perilously close to its major support level. Nifty once again fell below the 6000 mark, indicating that this level is going to be a major resistance unless there are any fresh triggers for the markets to rise from this level. The levels to watch out for Nifty will be 6008 & 6034 on the upside and 5948, 5927 & 5892 on the downside. On the currency front, the Rupee gained for a second straight session, boosted largely due to dollar sales from a large petrochemical firm, which helped offset the demand for the dollar from oil firms. The partially convertible Rupee finally closed at 54.75 while the near month USD-INR future settled at 55.00 for the day.

On the international markets front, the Asian and the European markets have closed on a fairly positive note, while the U.S. markets are trading with gains amidst investor optimism about fourth quarter corporate earnings. On the Energy futures front, both the Brent and WTI crude oil futures are trading almost flat at 111.50 & 93.05 $/bbl respectively, after  the data showed increase in the weekly U.S. crude oil inventories and the Natural Gas future is trading down by 3.31% at 3.11 $/MMBtu after the data showed an unexpected rise in weekly U.S. Natural gas inventories.