SHOCKED

The markets opened on a flat note and traded rangebound for the initial two hours of trade, till the credit policy was announced, which was not taken lightly by the market and the markets reacted by falling a bit, but before the markets could understand the full impact of the credit policy statement, the news about political turmoil, hit the markets and the markets fell almost vertically and could not recover from that point and traded near their day’s low, till the end of the session and ultimately both the indices closed very near to their lowest point of the day. The Nifty and the Sensex closed down by 89 and 285 points respectively. The market breadth also ended on a grim note with 336 advances to 1173 declines. On the sectoral front, there was across the sector selling, but still the Banking sector was the biggest loser, followed by the Midcap, Energy, Infra & Auto sectors. On the individual stocks front, GAIL, Ranbaxy, Bajaj Auto, Lupin & Sun Pharma were the top five Nifty gainers, while BHEL, Bharti Airtel, Sesa Goa,  DLF & Rel Infra were the top five Nifty losers for the day. On the institutional side, there was very little participation with FIIs and DIIs turning net buyers to the tune of mere 62 and 71 crores in the cash market.

On the derivatives side, FIIs were net sellers in both Index futures and options to the tune of 805 and 533 crores and they were also net sellers in both Stock futures and options to the tune of mere 27 & 11 crores respectively. Nifty future settled at 5752, with just 6 points premium to the spot, along with a considerable increase in open interest. On the options side PCR stood at 1.21, along with a increase in the India VIX by 5.43%. On the Call options side, the 5800 call added the maximum open interest, followed by the 5900, 6000 & 5700 calls, while on the Put options side, the 5700 put lost the maximum open interest, followed by the 5800,5900 & 5600 puts. The entire activity in the F&O space saw short buildup on the Index futures side along with massive call writing at higher levels, while profit booking happened on the Put options side.

On the technical side, Nifty clearly broke out of the trading range, formed over the last eight sessions and the underlying market breadth suggests that the market weakness will continue for few more sessions. The levels to watch out for Nifty will be 5830, 5869 on the upside and 5691, 5675 & 5638 on the downside. On the currency front the Rupee bounced off from a nearly three week low touched earlier today after a disappointing credit bank policy statement and as a key ally withdrew support from the ruling coalition. The partially convertible Rupee finally closed at 54.37, while the near month USD-INR future settled at 54.47 for the day.

On the international markets front, the Asian markets have closed on a mixed note, while the European markets have closed deep in the red and the U.S. markets are also trading with losses as investors weigh growth in new home construdtion against concerns that  Europe’s debt crisis may intensify. On the Energy futures front, both the Brent and WTI crude oil futures are trading down by 1.85 & 1.47% at 107.48 & 92.73 $/bbl respectively, while the Natural gas future is trading up by 1.79% at 3.95 $/MMBtu.