Nifty closes below 5,300 mark; UP election outcome eyed

The domestic index S&P CNX Nifty snapped the day’s trade below its psychological support level of 5,300 on Monday as traders offloaded long positions ahead of the outcome of Uttar Pradesh assembly elections. Weak cues from European markets also added to the woes. Globally, Asian markets were down on concerns over China’s growth. According to reports, Asian stocks fell, halting a run of 11 weekly gains, as China said it is targeting the slowest growth since 2004 and the nation’s service industries contracted. Further, European markets are lower today with shares in Germany off the most.

The Indian equity market made a soft opening tracking weak trend in Asian peers. Nifty breached its crucial 5,350 mark in the initial trade as sentiments remained subdued ahead of the UP election results, due on Tuesday. Afterwards, market traded near its crucial support 5,300 level till late morning trade. Moreover, shares of metal companies remained under pressure and edged lower on reports that the China, the world’s largest consumer of copper and aluminum, scaled down its GDP growth target to 7.5% this year from last year's 8 percent. This is the first time for the Chinese government to lower its economic growth target after keeping it around 8 percent for seven consecutive years. Selling intensified across the sectors in afternoon trade and the index breached its crucial 5,300 mark hitting its 4-1/2 week low in afternoon trade.  In the mid noon trade, market trimmed some of its losses. Meanwhile, Reserve Bank of India (RBI) Deputy Governor Subir Gokarn said in an interview that there is still room for the RBI to cut the cash reserve ratio (CRR) for banks. In the final hour of trade, the index once again trimmed some losses after hitting intraday low in late trade. Finally, Nifty snapped the sluggish day of trade with a cut of about one and half a percentage point. Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Realty remained the major loser, down 3.47% followed by CNX Metal down 3.23% and Bank Nifty down by 2.60% while CNX Media and CNX FMCG surged 0.38% and 0.30% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 2.55% and reached 28.92.

The India VIX witnessed an addition of 2.55% at 28.92 as compared to its previous close of at 28.20 on Saturday.

The 50-share S&P CNX Nifty lost 79.05 points or 1.47% to settle at 5280.35

Nifty March 2012 futures closed at 5,318.55 at a premium of 38.20 points over spot closing of 5,280.35, while Nifty April 2012 futures were at 5,356.50 at a premium of 76.15 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw contraction of 0.21 million (mn) units taking the total outstanding open interest (OI) to 24.92 mn units.

From the most active contract, Reliance Communications March 2012 futures were at a premium of 1.35 point at 97.50 compared with spot closing of 96.15. The number of contracts traded was 15,536.

Tata Motors March 2012 futures were at a discount of 0.05 point at 274.40 compared with spot closing of 274.45. The number of contracts traded was 13,234.

DLF March 2012 futures were flat at 193.00 compared with spot closing of 193.00. The number of contracts traded was 15,948.

Reliance Power March 2012 futures were at a premium of 1.35 point at 136.60 compared with spot closing of 135.25. The number of contracts traded was 15,867.

HDIL March 2012 futures were at a premium of 0.65 point at 102.70 compared with spot closing of 102.05. The number of contracts traded was 13,731. 

Among Nifty calls, 5600 SP from the March month expiry was the most active call with an addition of 0.36 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with an addition of 0.55 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (4.77mn) and that for Puts was at 5200 SP (7.98 mn).

The respective Support and Resistance levels are: Resistance 5328 -- Pivot Point 5296.85 -- Support 5249.2.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.28 for March -month contract.

The top five scrips with highest PCR on OI were JP POWER 5.30, SKUMARSYNF 4.33, SCI 2.56, CANBK 2.00 and MARUTI 1.85

Among most active underlying, Suzlon witnessed an addition of 3.52 million of Open Interest in the March month futures contract followed by IFCI which witnessed an addition of 0.60 million of Open Interest in the near month contract. Meanwhile, LITL witnessed contraction of 1.90 million in the March month futures. Also, RCOM witnessed contraction of 0.21 million in Open Interest in the March month contract. Finally, Tata Motors witnessed an addition of 0.53 million of Open Interest in the near month futures contract.