Mauritius jitters drag Nifty below 5,300 mark

The fifty stock index -- Nifty -- witnessed massacre on Monday and ended with a triple digit cut on the back of relentless selling triggered by concerns over renegotiation of tax treaty with Mauritius. Earlier, the Indian equity market opened with modest gains but, fell sharply and breached its crucial 5,200 mark at one point of time on reports that tax treaty talks between India and Mauritius were likely to resume soon in an attempt to revise the existing double taxation avoidance agreement between the two countries. However, the index got some support at its crucial 5,200 mark as it showed sign of recovery after Finance ministry’s sources clarified the news related to the Mauritius Tax Treaty, that the timeline on the talks is yet to be decided. CBDT too clarified that Mauritius expressed willingness for talks on tax treaty three months back and that India is yet to start talks with Mauritius on it. Afterwards, market traded in the tight range but below its crucial 5,300 mark as ADAG group stocks, Reliance Communication and Reliance Infrastructure ended with a cut of over 7.50 and 6 percent respectively after news of being excluded from the Sensex with effect from August 8. Moreover, GTL and GTL Infra were smashed badly by over 60% and 40% respectively during the trade too weighed on the sentiments, while Index heavyweight Reliance Industries registered a fresh 52-week low, down by about four percent to make it seven successive days of losses. Finally, Nifty snapped the choppy day trade with a cut of over two percent.

On the global front, the US markets managed to close with some gains in the last session of the previous week while, Most of the Asian equity indices finished the day’s trade in the negative terrain on Monday after European finance ministers delayed a decision to extend emergency help to prevent Greece from defaulting on its debts. Moreover, all the European counterparts were trading in the red where major indices viz. CAC, DAX and FTSE were trading with a cut in the range of 0.50-1 percent at this point of time. Back home, on the sectoral front, all the indices on NSE have hammered, CNX Realty remained the major laggard, losing 3.91% followed by CNX IT down 3.00%, CNX Infra dropped 1.50% and Bank Nifty declined by 1.08%. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 9.42% and reached 22.18, while S&P Nifty closed at 5,257.90 losing 108.50 points or 2.02%.

The India VIX witnessed a gain of 9.42% at 22.18 on Monday as compared to its previous close of 20.27 on Thursday.   The 50-share S&P CNX Nifty shed 108.50 points or 2.02% and settled at 5,257.90.

Nifty June 2011 futures closed at 5,265.00, at a premium of 7.10 points over spot closing of 5,257.90, while Nifty July 2011 futures were at 5,278.00 at a premium of 20.10 points over spot closing. The near month June 2011 derivatives contract expires on Thursday, June 30, 2011.

Nifty June futures saw addition of 11.13% or 2.70 million (mn) units, taking the total outstanding open interest (OI) to 27.04 mn units.

From the most active underlying, RIL June 2011 futures closed at a premium of 2.90 points at 836.05 compared with spot closing of 833.15. The number of contracts traded was 33,590.

SBI’s June 2011 futures were at a premium of 5.30 point at 2184.30 compared with spot closing of 2179.00. The number of contracts traded was 22,838.

Tata Motors June 2011 futures were at a premium of 3.10 points at 939.10 compared with spot closing of 936.00. The number of contracts traded was 25,282.

GTL June 2011 futures were at a premium of 0.55 at 126.50 compared with spot closing of 125.95. The number of contracts traded was 73,716.

ICICI Bank June 2011 futures were at a premium of 1.10 at 1027.10 compared with spot closing of 1026.00. The number of contracts traded was 20,941.

Among Nifty calls, 5400 SP from the June month expiry was the most active call with addition of 1.44 million or 29.76%.

Among Nifty puts, 5300 SP from the June month expiry was the most active put with contraction of 0.54 million or 7.15%.

The maximum Call OI outstanding for Calls was at 5400 SP (6.28 mn) and that for Puts was at 5300 SP (7.08 mn).

The respective Support and Resistance levels are: Resistance 5358.23 -- Pivot Point 5277.06 -- Support 5176.73.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.93 for June -month contract.

The top five scrips with highest PCR on OI were BEML 3.00, Bharat Forge 3.00, Sintex 2.00, PNB 1.57 and Sun Pharma 1.54.

Among most active underlying, GTL witnessed a contraction of 1.28% of Open Interest (OI) in the June month futures contract followed by RIL too witnessed a contraction 0.98% of Open Interest (OI) in the near month contract. Meanwhile Tata Motors witnessed an addition of 7.24% of OI in the June month futures while SBI witnessed a contraction of 2.67% of OI in the June month futures.