Nifty extends its downfall despite drop in food inflation

The fifty stock index -- Nifty -- extended its yesterday’s downfall and ended the day’s trade below its crucial 5,550 mark on Thursday with a cut of about half a percent as selling pressure was witnessed in some of the index heavyweights while, weakness across European markets ahead of the new bailout plan for Greece too dampened the sentiments. The index traded in the negative terrain for most part of the day and snapped the session near its intraday low. Earlier, the Indian equity markets made a soft start tracking weak cues from global indices, but turned into green with some amount of recovery witnessed in Asian markets. Market traded near its neutral line in the morning trade, as investors came through the latest batch of quarterly earnings and weekly inflation data. In the early noon trade, market started its south bound journey despite a drop in food inflation as investors continued to stay at bay on expectations that RBI may hike its key policy interest rates by a further 25 basis points next week. Food inflation cooled down to 7.58% versus 8.31% while, Primary articles inflation for week ended July 9 came at 11.13% versus 11.58% (WoW), fuel group inflation remained unchanged at 11.89% (WoW). The benchmark continued its downfall and breached its crucial 5,550 mark in mid afternoon trade as European counterparts turned red after a decent start. Meanwhile, PSU oil marketing companies viz. BPCL, HPCL and IOC all snapped the trade with a cut in the range of 0.50-2.50 percent after crude prices extended their gains for the second straight day and surged past $98 on Wednesday after data showed domestic crude stocks fell sharply last week. Moreover Kotak Mahindra Bank, Biocon, Exide Industries reported lower than expected Q1 result which also hurt the investors' sentiments while, the companies like Mindtree, Hero Honda and Hindustan Zinc beat the market expectation. Finally, Nifty snapped the day’s trade near its intraday low.

On the global front, the US markets closed lower overnight on concerns about lifting the US debt limit and Europe's debt crisis while, Asian equity indices recovered from its initial downfall and finished the day’s trade on a mixed note on Thursday. Moreover, the European counterparts were trading mostly in the red where major indices like CAC and FTSE were trading with a loss of about a percent at this point of time. Back home, most of the sectoral indices on the NSE settled in the negative territory with CNX Realty losing the most, ending with a cut of about one and a half percent followed by Bank Nifty, down by 1.03% and CNX Energy down by 1% while, CNX FMCG up 0.16% and CNX IT up by 0.13% remained the only gainers on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 1.88% and reached 18.75, while S&P Nifty dropped by 25.45 points or 0.46% to close at 5,541.60.

The India VIX witnessed a declined 1.88 % at 18.75 on Thursday as compared to its previous close 19.11 on Wednesday

The 50-share S&P CNX Nifty declined 25.45 points or 0.46% and settled at 5,541.60.

Nifty July 2011 futures closed at 5,547.05, at a premium of 5.45 point over spot closing of 5,541.60, while Nifty August 2011 futures were at 5,563.00 at a premium of 21.40 points over spot closing. The near month July 2011 derivatives contract expires on Thursday, 28 July, 2011. Nifty July futures saw an addition of 3.33% or 0.71 million (mn) units, taking the total outstanding open interest (OI) to 22.30 mn units.

From the most active contract by contract value, Hero Honda July 2011 futures closed at a premium of 6.35 points at 1795.20 compared with spot closing of 1788.85. The number of contracts traded was 12,111.

Suzlon July 2011 futures were at a discount of 0.05 point at 52.50 compared with spot closing of 52.55. The number of contracts traded was 11,347.

SBI’s July 2011 futures were at a premium of 4.35 at 2461.95 compared with spot closing of 2457.60. The number of contracts traded was 14,452.

Petronet LNG July 2011 futures were at a discount of 2.80 at 165.90 compared with spot closing of 168.70. The number of contracts traded was 13,310.

Crompton Greaves July 2011 futures were at a premium of 0.15 at 181.20 compared with spot closing of 181.05. The number of contracts traded was 22,949. Among Nifty calls, 5600 SP from the July month expiry was the most active call with an addition of 0.12 million or 13.55%.

 Among Nifty puts, 5500 SP from the July month expiry was the most active put with  an addition of 0.07 million or 6.38%.

The maximum Call OI outstanding for Calls was at 5600 SP (1.01 mn) and that for Puts was at 5500 SP (1.15 mn).

The respective Support and Resistance levels are: Resistance 5569.43 -- Pivot Point 5551.06 -- Support 5523.23.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.97 for July month contract.

Among most active underlying, Crompton Greaves witnessed a decline of 2.44% of Open Interest (OI) in the July month futures contract followed by SBI witnessed a decline of 0.91% of Open Interest (OI) in the near month contract. Meanwhile Reliance witnessed an addition of 2.38% of OI in the July month futures respectively. Lastly, Petronet LNG witnessed an addition of 61.99% of Open Interest (OI) in the July month futures.