Southbound journey continues; Nifty breaches 5,300 mark

Domestic index S&P CNX Nifty continued its southbound journey and snapped the day’s trade below its psychological support level of 5,300 on Monday as investors looked cautious ahead of rates cut in April post Budget considering high oil prices. Political uncertainties also added to the woes, after Prime Minister Manmohan Singh accepted Dinesh Trivedi’s resignation as Railway Minister. World stock markets were mixed on Monday as doubts about Greece’s ability to follow through with tough economic reforms required under an international bailout overtook good news about the US economy. Moreover, crude oil for April delivery increased 42 cents to $107.48 a barrel on the New York Mercantile Exchange. Back home, selling pressure in index heavyweight Reliance Industries along with banking and software shares too dampened the sentiments.

Earlier, the market opened in the positive terrain following firm Asian counters but, immediately wiped out all gains with Nifty dropping below its crucial 5,300 level as the investor sentiment continued to be weak as the Union Budget failed to bring cheer to markets. In the mid afternoon, market witnessed a sharp recovery and touched its green land for a while as the recovery proved short lived and market once again started southbound journey as investors remained concern over rising oil prices which increased over $107 a barrel mark. Moreover, political jitters too weighed down the sentiments after railway minister Dinesh Trivedi on Sunday night resigned from the Union Cabinet to bring down the curtain on the controversy that his rail budget kicked off. The selling intensified in afternoon trade and market breached its crucial 5,250 mark in the late trade. Meanwhile, software majors witnessed selling pressure on concerns about weaker-than-expected Jan-Mar earnings and uncertainty about corporate IT spends in the year starting April. TCS, Infosys, Wipro and HCL Tech all edged lower in the trade. While, bank shares lost ground for the third straight session after the Reserve Bank of India, at its credit policy meet last week, maintained a status-quo on key policy rates. ICICI Bank, HDFC Bank, SBI and Punjab National Bank ended down 1-4 percent each. In the final hour of trade market witnessed a marginal recovery and managed to end just over its crucial 5,250 mark but with a cut of over a percentage point.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, PSU Bank remained the major loser, down 3.15% followed by CNX Realty down 2.62% and Bank Nifty down by 1.95% while CNX FMCG and CNX Pharma surged 1.15% and 0.11% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0.69% and reached 22.97.

The India VIX witnessed contraction of 0.69% at 22.97 as compared to its previous close of at 23.13 on Friday.

The 50-share S&P CNX Nifty lost 60.85 points or 1.14% to settle at 5257.05.

Nifty March 2012 futures closed at 5,277.30 at a premium of 20.25 points over spot closing of 5,257.05, while Nifty April 2012 futures were at 5,318.85 at a premium of 61.80 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw contraction of 0.66 million (mn) units taking the total outstanding open interest (OI) to 26.78 mn units.

From the most active contract, Tata Motors March 2012 futures were at a premium of 0.90 point at 283.75 compared with spot closing of 282.85. The number of contracts traded was 10,857.

ITC March 2012 futures were at a premium of 1.50 point at 221.80 compared with spot closing of 220.30. The number of contracts traded was 8,923.

DLF March 2012 futures were at a premium of 1.70 at 194.20 compared with spot closing of 192.50. The number of contracts traded was 13,975.

HDIL March 2012 futures were at a premium of 0.90 point at 92.10 compared with spot closing of 91.20. The number of contracts traded was 15,053.

Reliance Industries March 2012 futures were at a premium of 3.90 point at 759.70 compared with spot closing of 755.80. The number of contracts traded was 16,222. 

Among Nifty calls, 5500 SP from the March month expiry was the most active call with an addition of 0.06 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with an addition of 0.36 million open interest.

The maximum OI outstanding for Calls was at 5500 SP (6.56mn) and that for Puts was at 5200 SP (7.62mn).

The respective Support and Resistance levels are: Resistance 5318.98-- Pivot Point 5278.76 -- Support 5216.83.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.07 for March -month contract.

The top five scrips with highest PCR on OI were ABG Ship 8.90, JP Power 4.79, DR reddy 3.05, Siemens 2.25 and SCI 2.13

Among most active underlying, Suzlon witnessed contraction of 0.56 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 an addition of 0.56 million in the March month futures. Also, Tata Motors witnessed contraction of 1.04 million in Open Interest in the March month contract. Finally, RCOM witnessed contraction of 0.69 million of Open Interest in the near month futures contract.