European debt worries drag Nifty lower

The fifty stock index -- Nifty -- ended the choppy day of trade with a marginal cut after languishing in the negative zone for most part of the day as investors remained worried over European debt crisis. Earlier, the Indian equity market made a flat start and slipped into the red in the very initial trade as investors opted to remain on the safer side in the absence of any positive cues. But, the benchmark pared all of its losses in mid morning trade and traded tad above its neutral line till late morning trade with short covering witnessed in some of the blue-chip stocks. Afterwards, the local index resumed its south-bound journey as European counterparts opened in the red on worries that the US government may not be able to settle on an agreement to cut the fiscal deficit. Meanwhile, the information technology shares lost maximum ground on concerns over their first quarter earnings amid the worsening debt troubles for US and Europe - the major importers of their services. Stocks like, Wipro, TCS and Infosys ended the trade with a cut of 0.45%, 1.97% and 0.60% respectively in the trade. The market continued its southward journey and touched its intraday low in the mid afternoon trade near its crucial 5,550 level. But, index got strong support at that level and made a recovery of about 20 points in the last half an hour of trade. Finally, Nifty ended the sluggish day of trade with a cut of 0.25 percentage point.

On the global front, the US markets closed with marginal gains on Friday after results from the European banks’ stress tests came out slightly better than expected while, most of the Asian equity indices finished the day’s trade in the negative territory on Monday as investors continued to fret over euro-zone sovereign debt while, debt problems in the US too dampened the sentiments in the region. Moreover, all the European counterparts were trading mostly in the red where major indices like CAC, DAX and FTSE suffered cut of over a percent at this point of time. Back home, most of the sectoral indices on the NSE settled in the negative territory with CNX Pharma losing the most, ending with a cut of over a percent followed by CNX IT down by 0.78% and CNX Energy down by 0.29% while, CNX Realty up 0.99%, CNX PSU Bank up 0.37% and CNX PSE up by 0.34% remained the gainers on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surge 1.25% and reached 20.20, while S&P Nifty dropped by 14.05 points or 0.25% to close at 5,567.05.

The India VIX witnessed an addition of 1.25% at 20.20 on Monday as compared to its previous close of 19.95 on Friday.

The 50-share S&P CNX Nifty lost 14.05 points or 0.25% and settled at 5,567.05.

Nifty July 2011 futures closed at 5,569.40, at a premium of 2.35 point over spot closing of 5,567.05, while Nifty August 2011 futures were at 5,588.00 at a premium of 20.95 points over spot closing. The near month July 2011 derivatives contract expires on Thursday, 28 July, 2011. Nifty July futures saw an addition of 7.94% or 1.72 million (mn) units, taking the total outstanding open interest (OI) to 23.41 mn units.

From the most active underlying, Tata Motors July 2011 futures closed at a discount of 17.05 points at 995.55 compared with spot closing of 1012.60. The number of contracts traded was 15,413.

SBI’s July 2011 futures were at a discount of 2.50 point at 2472.10 compared with spot closing of 2474.60. The number of contracts traded was 11,728.

ICICI Bank July 2011 futures were at a premium of 4.00 at 1048.00 compared with spot closing of 1044.00. The number of contracts traded was 11,343.

TCS July 2011 futures were flat at 1123.00 compared with spot closing of 1123.00. The number of contracts traded was 9,708.

HDFC Bank July 2011 futures were at a premium of 1.20 at 516.05 compared with spot closing of 514.85. The number of contracts traded was 8,436.  Among Nifty calls, 5600 SP from the July month expiry was the most active call with addition of 0.79 million.

 Among Nifty puts, 5600 SP from the July month expiry was the most active put with addition of 0.47 million.

The maximum Call OI outstanding for Calls was at 5600 SP (8.08 mn) and that for Puts was at 5500 SP (6.87 mn).

The respective Support and Resistance levels are: Resistance 5592.11-- Pivot Point 5571.53-- Support 5546.46.

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

The top five scrips with highest PCR on OI were Sun Pharma 3.47, Votlas 2.00, PNB 1.89, Sun TV 1.45, and Jain Irrigation Systems 1.25.The most active underlying in the July month futures contract included Tata Motors, followed by SBI, Infosys, TCS and finally ICICI Bank.