TREND CHANGE ?

The markets opened on a very shaky note, after yesterday’s carnage, and briefly entered the negative zone, within the first fifteen minutes of trade, but eventually started inching upwards and touched their intraday highs over the next two hours, and from that point onwards, the markets traded rangebound till the end of the session and ultimately both the indices closed on an almost flat note. The main reason for the markets to end up in the green was the wholesale inflation index, which eased to its lowest in three years, spurring hope that the RBI could continue to cut rates. The Nifty and the Sensex closed up by 15 & 31 points respectively. The market breadth was however negative with 651 advances to 717 declines. On the sectoral front, the Pharma sector was the biggest gainer, followed by the Midcap sector, while the rest of the sectors ended up with marginal gains. On the individual stocks front, Ranbaxy, Sun Pharma, Bank of Baroda, Power Grid & ONGC were the top five Nifty gainers, while Dr. Reddy, HCL Tech, Bajaj Auto, BHEL & JP Associate were the top five Nifty losers for the day. On the Institutional side, FIIs were net buyers to the tune of 421 crores, while the DIIs were net sellers to the tune of 412  crores in the cash market.

On the derivatives side, FIIs were net buyers in both Index futures and options, to the tune of 324 & 273 crores respectively, while they were net sellers in Stock futures to the tune of 178 crores and net buyers in Stock Options to the tune of mere 4 crores only. Nifty future settled at 6006, with 11 points premium to the spot, along with a considerable increase in open interest. On the Options side PCR stood at 1.06, along with a fall in the India VIX by 1.94%. On the Call Options side, the 6200 call lost the maximum open interest, followed by the 6100, 5600 & 5700 calls, while the 6000 call added the maximum open interest followed by the 5900 call. On the Put Options side, the 5900 put added the maximum open interest, followed by the 5800 & 5500 puts, while the 6100 put lost the maximum open interest, followed by the 5700 put. The entire activity in the F&O space indicates profit booking in the options space along with fresh longs in Index futures.

On the technical side, the immediate uptrend seems to be in danger, as there are clear signals of exhaustion and Nifty may see a healthy correction before the next uptrend begins, but one has to remember that Nifty is still trading in the breakout zone, and any deep correction will be followed by a sharp bounceback. The levels to watch out for Nifty will be 6024, 6053 on the upside and 5968, 5941, 5916 on the downside. On the currency front the Rupee ended lower today, as a sharp fall in wholesale inflation raised optimism that the central bank would cut rates to boost economic growth. The partially convertible Rupee finally closed at 54.81, while the near month USD-INR future closed at 54.94 for the day.

On the international markets front, the Asian markets have closed on a mixed note, while the European markets have closed on a mildly positive note and the U.S. markets are trading with modest gains on increased optimism over growth in the world’s largest economy. On the Energy futures front, both the Brent and WTI crude oil futures are trading marginally down at 102.59 & 94.89 $/bbl respectively, while the Natural gas future is trading up by 1.58% at 3.98 $/MMBtu