Disappointing Union Budget drags Nifty below 5,350 mark

Massacre continued for second day in a row on Friday as Union Budget proposals failed to prop up the investors’ sentiments and domestic index S&P CNX Nifty snapped the session with a cut of over a percentage point. On the global front, the US jobs and manufacturing data signaled a recovering global economy. While, the Asian markets gave mixed signals, with two of its indices in the green. The German and the European indices edged higher in the trade at this point of time. Back home, high fiscal deficit forecast of 5.1% of the gross domestic product (GDP) for 2012-13 also weighed on market sentiment.

Earlier, the market made a flat start as market-men applied cautious approach in the early trade ahead of Budget but, soon pocketed some gains on selective buying by funds and retail investors on expectations of a market-friendly Union Budget for the year 2012-13. Although, once the Finance Minister (FM) Pranab Mukherjee started divulging the details of Union Budget the market started falling from its high point of the day’s trade as sentiments got spooked as FM announced hike in Service taxes, raising it to 12% from 10% earlier. Afterwards, the index turned red and breached its crucial 5,350 mark as the Budget proposals were not able to meet the market expectations. But, the benchmark got huge support near its crucial 5,350 mark and turned positive recapturing psychological 5,400 mark. Meanwhile, the government today lowered the securities transaction tax (STT) to 0.1 percent, a move that will bring down costs of equity transactions.  Moreover, auto shares edged higher after no announcement of excise duty on diesel cars. However, standard excise duty rate was increased from 10 percent to 12 percent, which was on expected lines and duty on large cars was raised from 22 percent to 27 percent. Nevertheless, it was the last leg of trade which weighed down the sentiments after Finance Minister in Union Budget 2012-13 set only modest targets for trimming a ballooning fiscal deficit. Market witnessed a steep fall of about 100 points and ended the day’s trade way below its crucial 5,350 mark with a cut of over a percentage point.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Energy remained the major loser, down 3.32% followed by CNX PSU Bank down 3.23% and CNX Media down by 3.03% while CNX FMCG and CNX Auto surged 1.89% and 0.15% respectively remained the only gainers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 9.01% and reached 23.13.

The India VIX witnessed an addition of 9.01% at 23.13 as compared to its previous close of at 25.42 on Thursday.

The 50-share S&P CNX Nifty lost 62.60 points or 1.16% to settle at 5317.90.

Nifty March 2012 futures closed at 5,342.70 at a premium of 24.80 points over spot closing of 5,317.90, while Nifty April 2012 futures were at 5,384.00 at a premium of 66.10 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw an addition of 1.06 million (mn) units taking the total outstanding open interest (OI) to 27.45 mn units.

From the most active contract, Tata Motors March 2012 futures were at a premium of 1.40 point at 287.95 compared with spot closing of 286.55. The number of contracts traded was 25,138.

ITC March 2012 futures were at a discount of 1.00 point at 217.20 compared with spot closing of 218.20. The number of contracts traded was 20,631.

DLF March 2012 futures were at a premium of 1.00 at 197.20 compared with spot closing of 196.20. The number of contracts traded was 16,812.

Reliance Industries March 2012 futures were at a premium of 8.70 point at 777.70 compared with spot closing of 769.00. The number of contracts traded was 21,775.

Tata Steel March 2012 futures were at a premium of 3.15 point at 454.65 compared with spot closing of 451.50. The number of contracts traded was 19,393.  

Among Nifty calls, 5600 SP from the March month expiry was the most active call with an addition of 0.64 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with contraction of 1.32 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (6.79mn) and that for Puts was at 5200 SP (7.26mn).

The respective Support and Resistance levels are: Resistance 5407.36-- Pivot Point 5356.18 -- Support 5266.71

The Nifty Put Call Ratio (PCR) OI wise stood at 1.11 for March -month contract.

The top five scrips with highest PCR on OI were ABG Ship 8.90, JP Power 3.93, DR reddy 3.79, Siemens 2.25 and Maruti 2.17

Among most active underlying, Suzlon witnessed contraction of 2.51 million of Open Interest in the March month futures contract followed by IFCI which witnessed contraction of 1.54 million of Open Interest in the near month contract. Meanwhile, LITL witnessed an addition of 3.88 million in the March month futures. Also, GVKPIL witnessed an addition of 0.03 million in Open Interest in the March month contract. Finally, Tata Motors witnessed an addition of 0.63 million of Open Interest in the near month futures contract.