DILEMMA

The markets opened on a very soft note and traded in the red for the initial two hours of the trading session, but managed to clawback in the green after the initial two hours of trade and traded rangebound for greater part of the session and with just one hour left for the end of the day’s session, the markets lost all their gains and closed near their lowest point of the day, till the end of the session The Nifty and the Sensex closed down by 40 & 90 points respectively. The market breadth was also negative with 572 advances to 788 declines. On the sectoral front the Banking sector was the biggest loser, followed by the Energy, Auto & Pharma sectors, while the IT sector was the biggest gainer for the day. On the individual stocks front, TCS, Dr. Reddy, Lupin, BPCL and Infosys were the top five Nifty gainers, while JP Associate, Axis Bank, Bank of Baroda, M&M and Bharti Airtel were the top five Nifty losers for the day. On the institutional side, both FIIs and DIIs were net buyers to the tune of 158 and 172 crores respectively in the cash market.

On the derivatives side, FIIs were net sellers in Index futures, to the tune of 509 crores and net buyers in Index  Options to the tune of 1456 crores, while they were net sellers in Stock futures to the tune of 76 crores and net buyers in stock options to the tune of mere 20 crores only. Nifty future settled at 5895 with just 14 points premium to the spot along with a marginal decrease in open interest. On the Option side, PCR stood at 0.97, while the India VIX closed almost flat. On the Call options side, the 6000 call added the maximum open interest, followed by the 6100, 5900 & 5800 calls, while there was uniform loss of open interest from the 5000 to 5700 calls. On the Put options side, the 5600 put added the maximum open interest, followed by the 5700, 5800 & 5500 puts. The entire activity in the F&O space indicates that although there are no considerable shorts in the system, the market participants are unwilling to carry forward their unhedged positions and accordingly call writing is happening at the higher levels , followed by corresponding increase of long positions on the put options side.

On the technical side, Nifty has fallen for the sixth consecutive session and is trading below most of its short term moving averages and has almost retraced 50% from its peak made on 20^th May 2013. The technical indicators on the daily and weekly charts also indicate a downtrend and do not indicate any sharp move on either side, unless there are some major policy announcements on the domestic as well as international front. The levels to watch out for Nifty will be 5923, 5945, 5975 on the upside and 5855, 5828 & 5743 on the downside. On the currency front , the Rupee hit a one year low on Friday and was at a striking distance of an all time low, but dollar selling by some exporters and state run banks helped gain some ground. The Rupee has been falling for five straight weeks, taking its losses since the start of May to 5.71 percent, to make it among the worst performing currencies in Asia during this period. The partially convertible Rupee finally closed at 57.06, while the near month USD-INR future settled at 57.28 for the day.

On the International markets front, except the Asian markets the European and the U.S. markets closed for the week with decent gains. On the Energy futures front, the Brent and the WTI crude oil futures have closed at 96.03 & 104.56 $/bbl respectively, while the Natural gas future has closed at 3.83 $/MMBtu.