"TRADING IDEA FOR MONDAY (08.08.2011)"

FIIs were net sellers with the tune of ` 1788.96 crore on Friday, the 5^th August 2011(prov. fig.);

FIIs were net sellers with the tune of ` 3028.05 crore in the last week whereas DIIs are the net buyers of ` 2156.09 crore.

The BSE Sensex tumbled 387.31 points or 2.19% to settle at 17,305.87, its lowest closing level since 11 June 2010. The Sensex lost 702.27 points at the day's low of 16,990.91 in early afternoon trade. The index fell 335 points at the day's high of 17,358.18 in mid-morning trade. The S&P CNX Nifty was down 120.55 points or 2.26% to 5,211.25, its lowest closing level since 14 June 2010. The Nifty hit a low of 5,116.45 in intraday trade. The BSE Mid-Cap index fell 2.16%, outperforming the Sensex. The BSE Small-Cap index declined 3.08%, underperforming the Sensex.

All the 13-sectoral indices on BSE posted losses. The BSE IT index (down 3.93%), the BSE TecK index (down 3.38%), and the BSE Realty index (down 3.13%), underperformed the Sensex. The BSE PSU index (down 1.15%), the BSE Healthcare index (down 1.48%) and the BSE Oil & Gas index (down 1.48%) outperformed the Sensex.

The market breadth was weak. On BSE, 2,364 shares declined while 609 shares managed gains and a total of 64 shares remained unchanged. From the 30 share Sensex pack, 26 stocks fell while only four of them managed gains.

FOR TODAY: US rating downgrade (AA+ from AAA) will be the major dragger for global markets including ours. On 05th August,2011, Credit Suisse reduced its year-end view of the S&P 500 to 1,350 from 1,450, citing weaker-than-expected growth. This may also trigger selling button in global markets. On European front, to ease the escalating worries over Italy & Spain, European Central Bank expressed its readiness to buy Italian and Spanish bonds if respective government commits to bringing forward specific reforms. Global indices may watch any development regarding this keenly.

On the F&O front, significant addition in the OI of “in the money” Puts & Calls may give rise to a range bound trade. A high put option open interest build up of around 7.2 mn is seen at 5000 strikes, while high OI of 4.2 mn is seen at 5200 call respectively (Nifty Call options of strike 5200 added 91295 lots to open interest while Put options of strike 5000 had a build up of 69740 lots), indicating that they will act as ranges in the coming week.

PCR at 0.93 and PCR (Volume) at 1.1 indicating weakness in market. VIX at 24.90 indicating wild volatility/swing in coming days.

WATCH 5194/5177/5115 AGAIN ON THE DOWN SIDE WHEREAS ON THE UPSIDE, IT MAY HIT 5250/5280