Nifty breaches 5,200 mark amid weakening rupee

Sentiments continued to remain bearish for second consecutive day on Thursday and the fifty stock index -- Nifty -- snapped the day’s trade in the negative territory below its crucial 5,200 mark after the rupee touched a four-month low, exacerbating worries about India’s fiscal and economic challenges, and the uncertainty about taxation of overseas investors. Moreover, the benchmark traded in the red throughout the day’s trade following subdued global cues. Overnight, US market provided a weak cues ending lower as investors pondered over the disappointing employment reports from the US and Euro-zone, which showed far fewer than expected jobs were added in April, intensifying concerns over slowing down global economic recovery. Moreover, Asian markets too ended mostly in the red. However, European counters opened higher as investors waited to see if ECB to hint stimulus measures.

Buoyed by weak global cues, domestic benchmark edged lower in early trade. Moreover, disappointing Auto sales figures for the month of April too dampened the sentiments and Auto space crumbled badly. Afterwards, the market extended initial losses and breached its psychological 5,200 level. Meanwhile, the banking index got hammered by RBI’s directive to set aside more capital to meet BASEL III requirements. The banks’ as per the RBI new directive, have to maintain core Tier I capital of at least 7 percent of their risk weighted assets on an ongoing basis. In the early afternoon trade, the index trimmed some losses and regained its important 5,200 mark following positive opening in European counters moreover, sentiments were also supported by sugar stocks as scrips like Balrampur Chini Mills, Bajaj Hindusthan and Shree Renuka Sugars sweeten after government on Wednesday removed the cap on sugar exports and placed the commodity under the open general licence category like wheat and rice. It was the final hour of trade, where market lost some more ground as investors remained concerned over weakening of rupee. Rupee hit fresh four-month low of Rs 53.26 against the American currency as several factors including trade deficit and volatile inflows continued to put pressure on the Indian currency. But, it proved as a blessing for the IT pack, which remained the lone gainer on the NSE sectoral space. The scrips like TCS, Wipro and Infosys edged higher in the trade. Finally, Nifty ended the day’s trade below its crucial 5,200 mark with a cut of about a percentage point.

Meanwhile, most of the sectoral indices on the NSE settled in the negative territory with CNX PSU Bank losing the most, ending with a cut of over two and a half percent followed by CNX Auto down by 2.44% and CNX Metal down by 1.85% while, CNX IT up 0.59% remained the lone gainer in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 3.82% and reached 19.25.

The India VIX witnessed an addition of 3.83% at 19.25 as compared to its previous close of at 18.54 on Wednesday.

The 50-share S&P CNX Nifty lost 50.75 points or 0.97% to settle at 5,188.40.

Nifty May 2012 futures closed at 5199.80 at a premium of 11.40 points over spot closing of 5188.40, while Nifty June 2012 futures were at 5218.40 at a premium of 30.00 points over spot closing. The near month May 2012 derivatives contract will expire on Thursday i.e. May 31, 2012. Nifty May futures saw an addition of 0.12 million (mn) units taking the total outstanding open interest (OI) to 18.51 mn units.

From the most active contract, Tata Motors May 2012 futures were at a premium of 0.90 point at 302.15 compared with spot closing of 301.25. The number of contracts traded was 15,765.

Pantaloon Retail May 2012 futures were at a premium of 1.90 point at 186.90 compared with spot closing of 185.00. The number of contracts traded was 8,085.

DLF May 2012 futures were at a discount of 0.35 points at 187.45 compared with spot closing of 187.80. The number of contracts traded was 8,078.

Tata Steel May 2012 futures were at a premium of 0.50 point at 449.05 compared with spot closing of 448.55. The number of contracts traded was 11,123.

ICICI Bank May 2012 futures were at a discount of 12.65 point at 848.35 compared with spot closing of 861.00. The number of contracts traded was 18,276.

Among Nifty calls, 5600 SP from the May month expiry was the most active call with an addition of 0.32 million open interest.

Among Nifty puts, 5100 SP from the May month expiry was the most active put with an addition of 0.76 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (5.16mn) and that for Puts was at 5100 SP (5.55mn).

The respective Support and Resistance levels are: Resistance 5210.25-- Pivot Point 5195.45-- Support 5173.6.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.14 for May -month contract.

The top five scrips with highest PCR on OI were ABG Ship 54.00, Grasim 1.92, Asian Paint 1.83, TCS 1.48 and Ind Hotel 1.45.

Among the most active underlying, Suzlon witnessed an addition of 1.77 million of Open Interest in the April month futures contract followed by IFCI which witnessed an addition of 0.57 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed contraction of 1.06 million in the April month futures. Also, JP Associates Infra witnessed contraction of 0.50 million in Open Interest in the April month contract. Finally, Tata Motors witnessed contraction of 0.76 million of Open Interest in the near month futures contract.