Sentiments turn choppy as S&P lowers India’s outlook; Nifty near 5,200 mark

Trade remained range-bound on penultimate day of the April F&O series and Nifty ended the session with a cut of 20 points as sentiments weighed down after the rating agency S&P lowered the outlook on India’s sovereign rating to negative from stable. On the global front, Japan’s Nikkei share average climbed a percent, boosted by decent US corporate results and an easing yen, though appetite for risk was tempered by political uncertainty in Europe and ahead of key central bank meetings. Moreover, European counters witnessed firm trade at this point of time. Back home, IT major Wipro reported slightly lower than expected numbers coupled with forecast of a muted revenue growth for its key IT services unit due to a fragile global economy.

Earlier, the Indian benchmark made muted start but traded in the green terrain in morning trade supported by positive global cues but, the gains remained capped as investors reacted negatively to the Wipro’s Q4 numbers and muted FY13 guidance. Wipro tanked over 7 percent as its fourth quarter numbers were not too great and its guidance for the first quarter of FY13 were muted. It forecasted IT services revenue at $1.52-1.55 billion for the April-June quarter, a growth of just 0.6 percent sequentially. Cautiousness prevailed across the domestic market but the index managed to put its leg in the green trajectory till late morning trade before the announcements by the credit rating agency S&P. Market witnessed a knee-jerk reaction and fell sharply by about 60-70 points breaching its crucial 5,200 mark on news that rating agency S&P revised the outlook on India's sovereign rating to negative from stable, though the agency retained the sovereign rating at BBB- for the time being but the outlook revision raised fears of a possible downgrade if growth is hit due to the absence of fiscal and policy reforms. At the same time, market trimmed some losses on the buzz that foreign rating agency Moody’s reaffirmed India’s rating of Baa3 and said country's outlook is stable. Rating agency also affirmed stable rating on local and foreign currency bonds. Though, market again lost its stem after the Moody’s clarified that that they have not issued any new statement on India’s sovereign rating and outlook. But, in the final hour of trade market managed to pare their losses following firmness in European counters. Finally, Nifty snapped the day’s trade a tad above its crucial 5,200 marl but with a cur of 0.40 percent.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX PSE remained the major loser, down 1.49% followed by CNX IT down 1.31% and CNX Realty down by 1.29% while CNX Auto and CNX FMCG surged 0.47% and 0.45% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 0.95% and reached 26.41.

The India VIX witnessed contraction of 1.61% at 18.94 as compared to its previous close of at 19.25 on Tuesday.

The 50-share S&P CNX Nifty lost 20.65 points or 0.40% to settle at 5202.00.

Nifty April 2012 futures closed at 5198.60 at a discount of 3.40 points over spot closing of 5202.00, while Nifty May 2012 futures were at 5,234.55 at a premium of 32.55 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 2.78 million (mn) units taking the total outstanding open interest (OI) to 10.54 mn units.

From the most active contract, Tata Steel  May 2012 futures were at a discount of 1.40 point at 464.00 compared with spot closing of 465.40. The number of contracts traded was 19,739.

ICICI Bank May 2012 futures were at a premium of 6.50 point at 846.45 compared with spot closing of 839.95. The number of contracts traded was 21,365.

Axis Bank May 2012 futures were at a discount of 17.05 points at 1079.45 compared with spot closing of 1096.50. The number of contracts traded was 17,887.

Reliance Industries April 2012 futures were at a premium of 0.40 point at 736.40 compared with spot closing of 736.00. The number of contracts traded was 20,166.

ICICI Bank April 2012 futures were at a premium of 0.40 point at 840.35 compared with spot closing of 839.95. The number of contracts traded was 27,970.

Among Nifty calls, 5400 SP from the April month expiry was the most active call with contraction of 0.28 million open interest.

Among Nifty puts, 5000 SP from the April month expiry was the most active put with contraction  of 0.06 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (6.75mn) and that for Puts was at 5000 SP (6.92mn).

The respective Support and Resistance levels are: Resistance 5238.51-- Pivot Point 5199.58 -- Support 5163.06.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.05 for April -month contract.

The top five scrips with highest PCR on OI were ABG Ship 3.53, Patni 2.12, SouthBank 2.10, Tata Chem 2.00 and Abirlanuvo 2.00.

Among most active underlying, Suzlon witnessed contraction of 22.52 million of Open Interest in the April month futures contract followed by IFCI which witnessed contraction of 13.06 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed contraction of 9.36 million in the April month futures. Also, JP Associates Infra witnessed contraction of 6.42 million in Open Interest in the April month contract. Finally, Tata Motors witnessed contraction of 4.16 million of Open Interest in the near month futures contract.