How will mkts react to US data?

What a day it has been. We opened in the most catastrophical way that we possibly could have because we reacted to two negative days of news towards close last week, and opened Monday morning gap-down with what was happening in the rest of Asia. If you look at how Asia has closed, you will get a sense of how those cracks were, anywhere between 2-4% down. The Sensex didn’t do anything different, when it opened trade. In fact at one point of time, we were down about 570 points intraday and then came a very sharp recovery, a mixture of some short covering and some fresh buying to close about 170 down and the Nifty for its part as well has not done too badly. In fact, it has recovered significant ground from the lows of the day to close just about 46 points down. Remember intraday we had those bad IIP numbers to deal with as well. So, you would have to say net-net we have come through not so bad.

On the broader market front, though you had a midcap and a small cap index that were down about 1% apiece and that is why the breadth is not looking as convincing down in favour of the declines by over 500 stocks. But what has been disheartening over the last couple of days, and you could blame it on the festivals that have gone by, the volumes that we have been trading on the turnover has been just barely about Rs 70,000-80,000 crore, just about Rs 55,000 crore on the futures and options side. And the futures, we were talking about short covering and it has gone into a premium and it has been that way for a couple of days in the last one week, closing at about 25-point premium. So, nothing wrong with that figure to scoff at.

It was the underdogs, ITC and HUL that came to the party today. Defensive plays as they are normally known, had a very good session for themselves, up about 3% and 5% respectively. And also power stocks in late trade, whether it was Neyveli Lignite , which was the strongest on huge buildup on the futures side as well. From the frontliners NTPC did well and you had a couple more like Birla Power and Power Grid also contributing on good volumes. State Bank , Siemens and SAIL , all of those three heavyweight frontliners from the Nifty also having a very strong day, up about 3%. So, that was what was happening in the good part of the market.

What dragged it down was oil and gas primarily. Reliance , Reliance Petroleum , ONGC and GAIL , all of these commanding significant weightage on the Nifty, all closing sharply in the red, as did stocks like Bharti, HDFC Bank , Sterlite and Tata Steel . So, a combination of these 8 stocks and you have a significant chunk of the Nifty that is in the red. These stocks down between 2-4% for themselves.

IT continues to be weak. Today, it was led by Infosys , Satyam and TCS following suit. So, not looking too good for any of these stocks, a year low for Infosys being made with that 3.5% cut.

What was interesting though was what was playing out outside the index, stocks like Lloyds Steel , Sunflag Iron & Steel . That midcap steel space was very active and the volumes were quite brisk in some of these. Ispat continuing to have a magical run, 8% up for itself and stocks like Essar Oil , Dish TV , Welspun and even from the refinery space MRPL which was your star of the day up about 20% on the cash and futures side. Bongaigaon refinery those also having a relatively good day as did JP Hydro power from that power space which we spoke about.

The twins IDFC , IFCI had a very good day, as did stocks like HMT and ITI all of these four stocks up on very good volumes. They have come back after a bit and stocks like WWIL, PTC , PFC that have run up reasonably hard over the past few weeks have actually taken the day off. As did stocks like Voltas , Arvind Mills, Idea and a couple of real estate stocks like DLF and India Bulls real estate that were looking not so special on a day that where the boarder markets eventually closed more in favor of the declines that the frontliners did.

Very interesting couple of days that have gone by on very thin volumes. Lets see where we can build on; data will keep trickling in from the US.