Bears hit back with a vengeance; Nifty breaches 5,350 mark

Bears struck back with a bang on Thursday and Nifty snapped the day’s trade with a fall of 50 points, breaching its crucial 5,350 level as investors remained on the sidelines as Government put its 5 percent stake in ONGC on sale, which  garnered bids for 29.22 crore shares out of the total of 42.77 crore on offer. However, global cues remained somber with US markets ending lower overnight while, traders in the Asian region squared off their position as Bernanke’s comments wiped out euphoria created by better than expected second tranche of long-term refinancing operation (LTRO) by European Central Bank (ECB). Bernanke warned on Wednesday that US recovery was ‘uneven and modest’. The Fed chief also avoided any suggestions of another round of quantitative easing to boost the economy.

Earlier, domestic market made lackluster opening after Fed Chairman Bernanke disappointed investors who hoped for a strong signal of more stimulus. The market extended its initial losses to breach its crucial 5,350 mark as investors remained cautious on worries of domestic economy, with the forthcoming budget, regional elections and rise in oil prices. Afterwards, the index trimmed some of its initial losses in late-morning trade. Meanwhile, stocks like Neyveli Lingnite, Coal India, NMDC gained in the session after reports that Cabinet has given its nod to the share buyback proposal of public sector companies. Moreover, shares of fertilizers companies hogged limelight in otherwise weak market on reports that the government has approved fixing nutrient-based subsidy (NBS) rates for fertilizers. The intraday recovery witnessed in late-morning trade proved short lived, with key benchmark started weakening once again in early afternoon trade on weak Asian stocks. Furthermore, the weak manufacturing PMI data which indicated that factory activity slowed in February from the previous month when it had accelerated at its fastest pace in eight months, also weighed on investors’ mood. In the mid noon trade market touched its intraday low just below its crucial 5,300 mark amid weak opening in European counterparts. Meanwhile, banks extended losses for a second day after economic growth slowed to its weakest pace in almost three years in the December quarter as high interest rates and rising input costs hurt investment and manufacturing. But, in the last leg of trade market witnessed some short-covering and Nifty managed to close over its crucial 5,300 mark but snapped the day’s trade with a cut of over 0.80 percentage points. Most of the sectoral indices on the NSE settled in the red, CNX Realty remained the major loser, losing 3.58% followed by CNX PSE down 1.24% and Bank Nifty down by 1.20% while, CNX Media and CNX MNC rose 1.12% and 0.90% in the trade, respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 2.74% and reached 27.67.

The India VIX witnessed an addition of 2.75% at 27.67 as compared to its previous close of at 26.93 on Wednesday.

The 50-share S&P CNX Nifty lost 45.45 points or 0.84% to settle at 5339.75.

Nifty March 2012 futures closed at 5,390.75 at a premium of 51.00 points over spot closing of 5,339.75, while Nifty April 2012 futures were at 5,427.50 at a premium of 87.75 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw contraction of 0.45 million (mn) units taking the total outstanding open interest (OI) to 25.58 mn units.

From the most active contract, Suzlon March 2012 futures were at a premium of 0.10 point at 29.75 compared with spot closing of 29.65. The number of contracts traded was 14,777.

Tata Motors March 2012 futures were at a premium of 3.85 point at 269.90 compared with spot closing of 266.05. The number of contracts traded was 13,398.

DLF March 2012 futures were at a premium of 1.85 points at 213.85 compared with spot closing of 212.00. The number of contracts traded was 36,292.

HDIL March 2012 futures were at a premium of 1.80 point at 110.60 compared with spot closing of 108.80. The number of contracts traded was 18,576.

Tata Steel March 2012 futures were at a premium of 2.40 point at 463.40 compared with spot closing of 461.00. The number of contracts traded was 19,798.  Among Nifty calls, 5600 SP from the March month expiry was the most active call with an addition of 0.16 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with contraction of 0.15 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (4.45 mn) and that for Puts was at 5200 SP (7.42mn).

The respective Support and Resistance levels are: Resistance 5375.63 -- Pivot Point 5336.56 -- Support 5300.68.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.32 for March -month contract.

The top five scrips with highest PCR on OI were ABG Ship 9.00, JP POWER 3.50, CANBK 2.00, SKUMARSYNF 1.86 and PNB 1.74

Among most active underlying, Suzlon witnessed contraction of 0.52 million of Open Interest in the March month futures contract followed by IFCI which witnessed   an addition of 1.96 million of Open Interest in the near month contract. Meanwhile LITL witnessed an addition of 0.51 million in the March month futures. Also, Tata Motors witnessed an addition of 0.89 million in Open Interest in the March month contract. Finally, R COM witnessed an addition of 1.30 million of Open Interest in the near month futures contract.