On January 17, 2011, benchmark equity indices traded sluggishly with a positive bias amid global uncertainties and concerns over potential rate hikes, leading to cautious investor sentiment. While IT and tech stocks saw some gains, sectors such as real estate, power, and metals experienced declines, resulting in a significantly weak market breadth. Analysts predict a possible rise in policy rates due to high food prices, and the central bank of China increased reserve requirements for banks, further influencing market dynamics.

1. Market Wrap Up
Jan 17, 2011
The benchmark equity indices continued their sluggish trade traded flat with positive bias as buying was witnessed in select counters
though the global cues were not encouraging and fears of a rate hike too kept weighing on sentiment to a notable extent, forcing the
investors to trade cautiously. Majority of the regional peers settled in red and European markets were also treaded in negative
territory while Dow future showed down tick on the screen trade. On the sectoral front IT and Tech stocks moved up, while realty,
power and metal declined. Meanwhile, broader indices traded in negative terrain. The market breadth on the BSE was extremely
weak; the losers thrashed the gainers by a huge margin.
Anil Dhirubhai Ambani Group (ADAG) stocks tumbled after the Securities and Exchange Board of India (Sebi) passed a consent order with
regard to its probe into possible violation of securities market norms by Reliance Infrastructure (R-Infra) and Reliance Natural Resources
(RNRL).
High food prices have raised fears of aggressive hike in policy rates by the central bank in 2011. As per a poll by Capital Market, economists
widely expect 25 basis points increase each in repo rate and reverse repo rate at 25 January 2010 policy review. China's central bank on
Friday raised the amount of money banks must keep on reserve for the seventh time in a year. It ordered state-owned banks to set aside an
additional 0.5% of deposits as reserves, effective 20 January 2011.
The BSE 30-share Sensex was up 22 points or +0.12% at 18882 while NSE 50-share Nifty ended the day flat at 5655.
Stocks Performance Top 3 Sensex Gainers:
HDFC (+3.1%),
IT Stocks: OFSS (+5.0%), Core Projects (+2.7%), TCS (+1.7%) Infosys (+2.1%),
IT stocks rose on a weaker rupee. Investors' optimism over the US economic recovery after US retail sales Cipla (+1.9%)
data showed a slight increase in December 2010, aided gains in IT shares. US is the key market for Indian IT
firms. IT bellwether Infosys rose on bargain hunting, recovering from last two days' losses triggered by Top 3 Sensex Losers:
disappointing Q3 result and as its earnings and revenue outlook for Q4 March 2011 disappointed investors. Rel Infra (-7.8%),
JP Associate (-5.6%),
Realty Stocks: Sobha Developers (-4.5%), Orbit Corp (-3.9%), HDIL (-3.4%) RCOM (-4.8%)
Interest rate sensitive realty stocks declined on worries higher interest rates could dent demand for
residential and commercial properties. Top 3 Sectoral Indices:
IT (+1.7%),
F&O Update
TECk (+1.3%),
The benchmark Nifty remained flat at 5655. VIX went down at 23.60 % receding by 1 % of Friday’s level. PCR in CD (+0.3%)
January strikes is at level of 0.72 which has decreased from Friday’s level. At money IV in options on Call side is
21.42 and Put options have IV figure of 22.21%. On put side Maximum OI is at 5600 strike level while 5500
added most open interest today. We can expect 5600 Level to act as support in near term. Call side has
maximum OI at 6200 and 5700 added most OI today. January NIFTY futures gained premium over the spot to
magnitude of 3.63 benchmark points, which is lower than Friday’s position. Overall we see some more
downside from these levels, and advice to use out of money options to take advantage of current situation. We
bought 5400 January Put at 22 Rs. which lost value today. We advice clients to hold the position for next day or
two, where we expect some sharp downward movement among index constituents.
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