Nifty exhibits massacre on weak Europe and Macquarie fund report

Prolonging its previous session’s fall, S&P Nifty snapped the day’s trade with a fall of over 90 points near its crucial 5,200 level as sentiments got undermined after reports showed Macquarie’s Asia hedge fund exited its short positions in Indian single stock futures in response to a controversial set of proposed tax rules that could lower investment returns. Moreover, global cues too remained sluggish as all the Asian counters shut shop in the red while European counters too trading in the negative terrain at this point of time as the outlook for Europe’s economy unexpectedly worsened in April. Back home, all sectoral indices on the NSE ended in the negative territory with realty, technology, infra and metals stocks leading the decline.

Earlier, after making a negative start, Indian benchmark immediately rebounded with Nifty regaining its crucial 5,300 mark supported by Reliance Industries that reported over 21 percent fall in Q4 profit, started trading higher because of its better than expected GRM numbers. Meanwhile, the sentiments got some support after shares of paper manufacturing companies rallied on the bourses on back of huge volumes. West Coast Paper Mills, Andhra Pradesh Paper Mills, Ballarpur Industries and Tamil Nadu Newsprint and Papers edged higher in the trade by 4-20 percent.  Afterwards, market traded in the tight band till late morning trade near its crucial 5,300 mark. The benchmark turned choppy and dipped into the red in early noon trade following subdued start in European counters. Moreover, sentiments also dampened on report that Macquarie’s Asia hedge fund exited its short positions in Indian single stock futures in response to proposed tax rules that could lower investment returns. In the mid noon trade, selling intensified and index breached its crucial 5,250 mark. Meanwhile, shares of telecom services providers such as Idea Cellular, Bharti Airtel and Reliance Communications slipped more than 4 percent each on reports that the Telecom Regulatory Authority of India (TRAI) has recommended a base price for auction of 2G spectrum at about Rs 3,700 crore that is higher than the 3G auction price of Rs 3,500 crore set in 2010. Finally, Nifty ended a tad above its crucial 5,200 mark with a massive cut of 1.71 percent. 

Meanwhile, all the sectoral indices on the NSE hammered badly and settled in the red; CNX Realty remained the major loser, losing 3.23% followed by CNX Infra down 3.05% and CNX Metal down by 3.04% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 7.36% and reached 21.57.

The India VIX witnessed an addition of 7.36% at 21.57 as compared to its previous close of at 20.09 on Friday.

The 50-share S&P CNX Nifty lost 90.25 points or 1.71% to settle at 5200.60. Nifty April 2012 futures closed at 5198.60 at a discount of 2.00 points over spot closing of 5200.60, while Nifty May 2012 futures were at 5,232.80 at a premium of 32.20 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 1.14 million (mn) units taking the total outstanding open interest (OI) to 17.00 mn units.

From the most active contract, Tata Motors April 2012 futures were at a premium of 1.15 point at 310.15 compared with spot closing of 309.00. The number of contracts traded was 10,252.

HDIL April 2012 futures were at a discount of 0.25 point at 82.25 compared with spot closing of 82.50. The number of contracts traded was 11,318.

Tata Steel April 2012 futures were at a premium of 1.30 points at 460.95 compared with spot closing of 459.65. The number of contracts traded was 18,842.

Reliance Industries April 2012 futures were at a premium of 0.10 point at 736.10 compared with spot closing of 736.00. The number of contracts traded was 28,950.

ICICI Bank April 2012 futures were at a premium of 5.75 point at 842.75 compared with spot closing of 837.00. The number of contracts traded was 19,606.

Among Nifty calls, 5400 SP from the April month expiry was the most active call with an addition of 1.20 million open interest.

Among Nifty puts, 5100 SP from the April month expiry was the most active put with an addition  of 0.23 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (7.81mn) and that for Puts was at 5100 SP (6.78mn).

The respective Support and Resistance levels are: Resistance 5278.38-- Pivot Point 5232.76 -- Support 5154.98

The Nifty Put Call Ratio (PCR) OI wise stood at 1.09 for April -month contract.

The top five scrips with highest PCR on OI were ABG Ship 3.53, Patni 2.12, Tata Chem 2.00, Abirlanuvo 2.00 and Jindal saw 2.00

Among most active underlying, IFCI witnessed contraction of 9.75 million of Open Interest in the April month futures contract followed by RCOM which witnessed contraction of 3.16 million of Open Interest in the near month contract. Meanwhile, JP Associates Infra witnessed contraction of 0.80 million in the April month futures. Also, Tata Motors witnessed contraction of 1.82 million in Open Interest in the April month contract. Finally, HINDALCO witnessed contraction of 3.55 million of Open Interest in the near month futures contract.