DECEPTION

The markets opened on a muted note, tracking their Asian peers and traded rangebound for the initial two hours of trade, but from that point onwards, made a remarkable recovery and touched their intraday highs over the next three hours, but to everyone’s surprise gave away almost all their gains and closed almost flat, till the end of the session. The Nifty and the Sensex closed up by 19 and 88 points respectively. The market breadth was however negative with 539 advances to 809 declines. On the sectoral front, the FMCG sector was the biggest gainer, followed by the Energy sector, while the rest of the sectors closed with marginal gains or losses. On the individual stocks front, ONGC, Bharti Airtel, IndusInd Bank, Kotak Bank and M&M were the top five Nifty gainers, while Cairn, Lupin, NTPC, Power Grid & NMDC were the top five Nifty losers for the day. On the institutional side, FIIs were net sellers to the tune of 1286 crores, while the DIIs were net buyers to the tune of 824 crores in the cash market.

On the derivatives side FIIs were net sellers in both Index futures and options to the tune of 576 and 14 crores respectively while they were net buyers in both Stock futures and options to the tune of 414 and 27 crores respectively. Nifty future settled at 5608, with 1 point discount to the spot along with a massive loss of open interest. On the Options side, the PCR stood at 0.96, along with a marginal increase in the India VIX by 0.62%. On the Call options side, with an exception of the 5600 and 5800 calls, there was uniform loss of open interest from the 5000 to 6100 calls. On the Put options side, with an exception of the 5500 and 5600 puts, there was uniform loss of open interest from the 5000 to 6100 puts.  The entire activity in the F&O space, is typical just before expiry, when most the contracts are either being squared off or being rolled over to the next series, which led to the shorts being aggressively squared off and ultimately pulled the markets form their day’s low.

On the technical side, Nifty staged a fightback due to the sharp short covering in the F&O markets, but the underlying market breadth still remains negative as the markets rose on falling volumes and the relentless FII selling is showing no signs of ebbing. The levels to watch out for Nifty, will be 5660, 5710 on the upside and 5564, 5519 on the downside. On the currency front, the Rupee gained marginally today, on some dollar selling related to arbitrage gains with the offshore non- deliverable forward market, but sentiment remained fragile after a steep sell off of stocks and debt. The partially convertible Rupee finally closed at 59.66, while the near month USD-INR future settled at 59.77 for the day.

On the international markets front, the Asian markets have closed on a mixed note , while the European markets have closed on an extremely positive note and the U.S. markets have rebounded from a nine week low after data showed durable goods orders and home sales increased more than forecast and consumer confidence climbed. On the Energy futures front, both the Brent and WTI crude oil futures are trading marginally up by 0.30% & 0.07% at 101.50 $/bbl and 95.26 $/bbl respectively, while the Natural Gas future is trading down by 1.72% at 3.69 $/MMBtu.