Bearish sentiments drag Nifty below 5,350 mark

Post three sessions’ of jubilation, sentiments turned bearish on Wednesday and domestic index S&P CNX Nifty snapped the choppy session with marginal correction of 35 points as market participants chose to take some profits off the table on last session of the truncated week amid subdued global cues. All the Asian equity indices ended the session in the red after Fed in US downplayed chances of further easing measures, saying that it can be considered only if the economy weakens further. The European markets also opened on a weak note. Back home, the Indian rupee too depreciated quite sharply, falling by 43 paise or 0.85% to Rs 51.15 a dollar.

The local benchmark nudged lower in the early trade tracking pessimism in regional peers. The renewed weakness in global equities was driven by Minutes of the Federal Open Market Committee (FOMC) March meeting that indicated that further bond buying might not happen. Afterwards, the domestic index trimmed a bit of its losses in morning trade as sentiments supported by power stocks. Power sector remained in jubilant mood after Centre issued a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with power producers, assuring them of at least 80 percent of the committed coal delivery after it failed to meet the March 31 deadline fixed by the Prime Minister’s Office on entering agreements with power producers facing fuel crunch. Weakness continued in mid-morning trade after the latest data showed growth in the services sector slipped to a five-month low in March 2012 as optimism about the business outlook in the coming year faded to its weakest level since 2009. The HSBC Markit Business Activity index fell sharply to 52.3 in March from 56.5 the previous month, though it remained above the 50 level that divides growth from contraction for a fifth month. The market extended its losses in afternoon trade and touched its intraday low as European markets edged lower in early trade. Finally, Nifty ended the choppy trade with a cut of over half a percent below its crucial 5,350 mark.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Realty remained the major loser, down 1.49% followed by CNX Media down 1.10% and CNX Metal down by 1.04% while CNX PSE surged marginally by 0.07% remained the lone gainer in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 3.09% and reached 20.63.

The India VIX witnessed an addition of 3.09% at 20.63 as compared to its previous close of at 20.01 on Tuesday.

The 50-share S&P CNX Nifty lost 35.60 points or 0.66% to settle at 5,322.90.Nifty April 2012 futures closed at 5,344.55 at a premium of 21.65 points over spot closing of 5,322.90, while Nifty May 2012 futures were at 5,376.80 at a premium of 53.90 points over spot closing. The near month April 2012 derivatives contract will expire on Thursday i.e. April 26, 2012. Nifty April futures saw contraction of 1.02 million (mn) units taking the total outstanding open interest (OI) to 17.88 mn units.

From the most active contract, Hindalco Industries April 2012 futures were at a premium of 0.80 point at 133.85 compared with spot closing of 133.05. The number of contracts traded was 6,910.

HDIL April 2012 futures were at a premium of 0.25 point at 87.10 compared with spot closing of 86.85. The number of contracts traded was 9,374.

DLF April 2012 futures were at a premium of 0.25 points at 205.20 compared with spot closing of 204.95. The number of contracts traded was 6,969.

Pantaloon Retail April 2012 futures were at a premium of 1.85 point at 176.35 compared with spot closing of 174.50. The number of contracts traded was 8,519.

BHEL April 2012 futures were at a discount of 1.70 point at 271.90 compared with spot closing of 273.60. The number of contracts traded was 12,388.

Among Nifty calls, 5600 SP from the April month expiry was the most active call with an addition of 0.31 million open interest.

Among Nifty puts, 5200 SP from the April month expiry was the most active put with an addition of 0.74 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (4.57mn) and that for Puts was at 5200 SP (5.78mn).

The respective Support and Resistance levels are: Resistance 5339.1-- Pivot Point 5322.2 -- Support 5306.

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

The top five scrips with highest PCR on OI were Hindustan Zinc 6.00, ABG Ship 3.94, National Alum 1.50, Grasim 1.38, and Coal India 1.35

Among most active underlying, Suzlon witnessed an addition of 3.22 million of Open Interest in the April month futures contract followed by IFCI which witnessed an addition of 0.24 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 3.81 million in the April month futures. Also, JP Associates Infra witnessed an addition of 0.28 million in Open Interest in the April month contract. Finally, Tata Motors witnessed contraction of 0.35 million of Open Interest in the near month futures contract.