DECEPTIVE

Once again the markets opened with a gap down, and touched their intraday low within the first half an hour of the trading session. The markets continued to trade in the same range, till the end of the first half of the trading session, but suddenly started recovering, after a statement from the deputy governor of RBI, indicated that, falling oil prices as well as declining core inflation and growth in India, will give the Reserve Bank of India room to adjust interest rates. The markets recovered very sharply and ultimately entered the positive zone and closed at the highest point of the day. The Nifty and the Sensex made a intraday recovery of 80 and 257 points respectively from the day's low and closed up by 6 and 23 points respectively. The market breadth also improved considerably, but still ended on a negative note, with 621 advances to 842 declines. On the sectoral front , the recovery was mainly led by the Banking sector, and almost all the sectors recovered from their day's low and closed in the positive zone, with a exception of the FMCG sector, which was the biggest looser of the day. On the individual stocks front, JP Associates, Siemens, Bank Of Baroda, LT & BPCL were the star performers for the day. On the institutional side, the picture was quite different, where FIIs turned net sellers to the tune of a massive 637 crores, while the DIIs were net buyers to the tune of 446 crores in the cash market.

On the derivatives side, the FIIs sold Index futures worth 348 crores and brought Stock futures worth 106 crores. Nifty future closed at 4840, with the discount narrowing down to just 8 points, along with a moderate increase in open interest. On the options side, the PCR increased to 1.08, along with a fall in the India VIX by 4.37%. On the Call options side, the 5200 call added the maximum open interest, followed by the 4800 & 4700 calls. On the Put options side, the 4900 put lost the maximum open interest, followed by the 5100 put, on the other hand the 4700 put added the maximum open interest followed by the 4800 put. The entire activity in the F&O space, indicates, some level of short covering owing to the sharp pullback, but not much has changed as it is evident from the FII sell figures, which indicate, every rise is used as a selling opportunity. On the currency front, the Rupee appreciated considerably and the USD-INR future closed at 55.73 for the day.

On the technical side, not much is to be read into today's up-move, and the levels to watch out for Nifty will be 4880, 4906 & 4968 on the upside and 4792, 4737 & 4704 on the downside.

On the international market front, the Asian and European markets have ended deep in the red and the U.S. markets are also trading in the negative zone, after data showed that factory orders dropped 0.6 percent in April, pointing to a deceleration in manufacturing and China’s non-manufacturing industries expanded at the slowest pace in more than a year.

On the energy futures front, the Brent and WTI crude futures are trading almost flat at 97.96 & 83.26 $/bbl respectively.

CARNAGE

As expected, the markets opened on a negative note in the aftermath of worst than expected domestic GDP figures, due to policy paralysis on the part of the government. After the initial two hours of the trading session, the situation turned worse, and the markets headed straight for a downward journey, and could not recover any of the losses, and both the indices closed at their lowest level, till the end of the session. The Nifty and the Sensex closed down by 83 and 253 points respectively. The market breadth was extremely negative with 376 advances to 1092 declines. There was across the sector selling, but the biggest looser was the Banking sector, followed by the Energy, Midcap and IT sectors, on the other hand, FMCG was the only sector, which survived the onslaught. On the individual stocks front, only ITC & GAIL, managed to buck the trend. On the institutional side, the FIIs were net sellers to the tune of 220 crores, while the DIIs were net buyers to the tune of 205 crores in the cash market.

On the derivatives side, FIIs were net sellers in Index futures, to the tune of 496 crores and net buyers in Stock futures to the tune of 123 crores. Nifty future closed at 4825, with 16 points discount to the spot, along with a considerable addition of open interest. On the options side PCR, marginally fell to 1.05, along with a rise in the India VIX by 1.52%. On the Call option side, the 5000 call added the maximum open interest, followed by the 5100, 4900 & 4800 calls. On the Put option side, the 5000 put lost the maximum open interest, followed by the 4900 & 5100 puts, on the other hand the 4700 put added the maximum open interest, followed by the 4800 put. The entire activity in the F&O space,  indicates shorting of Index futures as well as massive call writing at higher levels, which will act as major resistance levels, in case of a pullback.

On the technical side, Nifty has once again breached the crucial level of 4888, and somehow managed to close near the intraday support of 4852, but all the indicators on the daily and weekly charts are strongly in sell mode. Going forward, as suggested last month, the possibility of the markets testing the Dec. 2011 lows, seems to be a reality now. The levels to watch out for Nifty will be 4910 & 4960 on the upside and 4810, 4771 & 4712 on the downside. On the currency front, the Rupee  appreciated slightly and the USD-INR future closed at 56.10, for the day.

On the international markets front, the Asian, European and the U.S. markets have also ended, deep in the red, namely due to the following factors, (i) Decline in the monthly employment figures and data showing the U.S. economy grew more slowly in the first quarter than previously estimated. (ii) A gauge of manufacturing in the euro zone dropped to a three-year low. (iii) China’s Purchasing Managers’ Index showed the weakest production growth since December. 

(iv) Europe’s debt crisis intensified as investors focused on Spain’s finances and Greece’s ability to remain in the euro region.

On the energy futures front, both the Brent and WTI crude futures closed with a massive fall of 3.38 & 3.81 % at 98.43 and 83.23 $/bbl respectively for the week.