Nifty plummets on RBI rate hike and weak global cues; breaches 5400 mark

The national stock Exchange’s benchmark index S&P CNX Nifty was unable to get any respite on Thursday and plunged further, breaching 5400 mark. Though the mood of the market was bearish since beginning, tracking feeble global cues but once the RBI mid quarterly policy were announced the slide accelerated that led the market end lower by about a percent. The overnight plunge in the global markets on worries of weak economic recovery and euro zone crisis gave soft cues for the other global markets and the Asian markets broadly followed the trend and so does the domestic markets. The sell off was so sharp that marketmen overlooked the sharp fall in global crude prices overnight and the marginal decline in the weekly food inflation numbers. RBI, as per street expectation increased the repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent and consequently the reverse repo rates were raised to 6.5 percent from 6.25 percent. Further it noted that, overall, even as there is deceleration in some important sectors, notably interest-sensitive ones such as automobiles, there is no evidence of any sharp or broad-based slowdown.  And that disappointed the street most which was expecting a pause now by the apex bank. The volume of the trade was higher than last couple of days with total turnover crossing over 1.36 lakh crore while NSE F&O turnover crossing 1.22 lakh crore mark.

The global scenario too remained gloomy and the after the major US markets plunged to new lows, the most of the Asian markets suffered cut in the range of 1.5-2%. With fear of Greece problem spreading to other EU nations after the Greek Prime Minister George Papandreou saying he will reshuffle his cabinet and seek a confidence vote. After jittering the other global markets the European markets themselves have made a weak start and all the major indices are trading lower by about a percent each at this point of time. On the NSE sectoral front, CNX IT suffered the most and declined by 1.74%, followed by CNX Infra down by 1.12%, Bank Nifty lost 0.51% and CNX Realty was down by 0.34%.

The India VIX witnessed a gain of 2.71% at 19.66 on Thursday as compared to its previous close of 19.14 on Wednesday.

The 50-share S&P CNX Nifty shed 50.75 points or 0.93% and settled at 5,389.80.

Nifty June 2011 futures closed at 5,409.00, at a premium of 12.25 points over spot closing of 5,396.75, while Nifty July 2011 futures were at 5,426.00 at a premium of 29.25 points over spot closing. The near month June 2011 derivatives contract expires on Thursday, June 30, 2011. Nifty June futures saw addition of 9.40% or 2.20 million (mn) units, taking the total outstanding open interest (OI) to 25.60 mn units.

From the most active underlying, SBI’s June 2011 futures closed at a premium of 7.00 points at 2217.00 compared with spot closing of 2210.00. The number of contracts traded was 35,820.

ICICI Bank June 2011 futures were at a premium of 3.50 point at 1032.00 compared with spot closing of 1028.50. The number of contracts traded was 20,757.

RIL June 2011 futures were at a premium of 5.00 points at 891.05 compared with spot closing of 886.05. The number of contracts traded was 22,506.

Tata Motors June 2011 futures were at a premium of 2.25 at 986.45 compared with spot closing of 984.20. The number of contracts traded was 19,176.

Titan June 2011 futures were converging at 4440.00 compared to spot closing of 4440.00. The number of contracts traded was 6,975.   Among Nifty calls, 5500 SP from the June month expiry was the most active call with addition of 0.99 million or 15.92%.

Among Nifty puts, 5400 SP from the June month expiry was the most active put with contraction of 0.73 million or 8.11%.

The maximum Call OI outstanding for Calls was at 5500 SP (7.25 mn) and that for Puts was at 5500 SP (8.33 mn).

The respective Support and Resistance levels are: Resistance 5432.9-- Pivot Point 5411.35-- Support 5375.2.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.10 for June -month contract.

The top five scrips with highest PCR on OI were Bharat Forge 3.00, Sintex 3.00, Sun TV 2.31, Areva T&D 1.33, and Videocon Industries 1.11.

Among most active underlying, SBI witnessed an addition of 0.14% contract followed by Reliance Industries which too added 4.50% of Open Interest (OI) in the near month contract. Meanwhile Tata Motors witnessed an addition of 0.33% of OI in the June month futures. Finally ICICI bank too added 4.44% of Open Interest (OI) in the June month futures.