Nifty snaps five days winning streak after S&P warning

Erasing all its initial gains, CNX S&P Nifty snapped its five days winning streak on Monday after rating agency Standard & Poor’s threatened India that it could lose its lowest investment grade rating of BBB- and become the first 'fallen angel' among the BRIC nations. Though, market traded with traction for most part of the day’s trade tracking positive global cues but, profit booking witnessed in last half an hour of trade amid S&P’s warning and rupee depreciation dampened the sentiments and the benchmark ended the trade below equator with a cut of about 0.30%. On the global front, the US surged on Friday to make their best week of gains in the year while, all the Asian equity indices ended in the positive terrain after Euro zone finance ministers agreed to lend up to $125 billion to shore up Spain’s troubled banks. Moreover, better than expected Chinese economic data too supported the sentiments. Back home, the Indian rupee depreciated 19 paise to 55.61 as against the US dollar after getting appreciated by around 30 paise at one point of time.

Buoyed by positive developments in euro zone, the local benchmark made a superb opening and extended its gains for the sixth day in a row, reclaiming its crucial 5,100 mark. The sentiments also remained cheerful as infrastructure space traded quite strongly for another day of trade on report that the government is working on mechanism to quickly release dues of infrastructure companies. Afterwards, market traded firmly above its crucial 5,100 level in noon trade following positive opening in European counters while, appreciation in Indian rupee as against the US dollar also aided the sentiments. Meanwhile, power producing majors rallied sharply in the session amid reports that power projects using imported coal could be allowed to hike tariffs by up to Re 1 per unit to counter the effect of increase in fuel price due to additional taxes or changes in law by the governments of source nations. But in the final hour of trade, market reversed all of its gains after global rating agency Standard & Poor's said India may become the first BRIC country to lose the investment grade rating. Finally, Nifty ended the day’s trade in the red with a cut of about 15 points.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Pharma remained the major loser, down 1.52% followed by CNX Realty down 0.96% and CNX PSU Bank down 0.88% while CNX FMCG surged 0.29% remained the lone gainer in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 6.60% and reached 25.02.

The India VIX witnessed an addition of 6.60% at 25.02 as compared to its previous close of at 23.47 on Friday.

The 50-share S&P CNX Nifty gain 14.25 by point or 0.28% to settle at 5,054.10.

Nifty June 2012 futures closed at 5,052.60 at a discount of 1.50 points over spot closing of 5,054.10, while Nifty July 2012 futures were at 5,074.80 at a premium of 20.70 points over spot closing. The near month June 2012 derivatives contract will expire on Thursday i.e. June 28, 2012. Nifty June futures saw contraction of 0.56 million (mn) units taking the total outstanding open interest (OI) to 15.09 mn units.

From the most active contract, HDIL June 2012 futures were at a premium of 0.55 point at 73.05 compared with spot closing of 72.50. The number of contracts traded was 13,672.

Tata Motors June 2012 futures were at a premium of 1.10 point at 236.15 compared with spot closing of 235.05. The number of contracts traded was 15,700.

DLF June 2012 futures were at a premium of 1.75 point at 193.55 compared with spot closing of 191.80. The number of contracts traded was 10,272.

Tata Steel June 2012 futures were at a discount of 0.10 point at 407.30 compared with spot closing of 407.40. The number of contracts traded was 12,133.

ICICI Bank June 2012 futures were at a premium of 1.10 point at 826.15 compared with spot closing of 825.05. The number of contracts traded was 18,274.

Among Nifty calls, 5200 SP from the Jun month expiry was the most active call with an addition of 0.78 million open interest.

Among Nifty puts, 4800 SP from the Jun month expiry was the most active put with an addition of 0.31 million open interest.

The maximum OI outstanding for Calls was at 5200 SP (5.58mn) and that for Puts was at 4800 SP (7.84mn).

The respective Support and Resistance levels are: Resistance 5105.46-- Pivot Point 5073.08--Support 5021.71.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.66 for June-month contract.

The top five scrips with highest PCR on OI were ABG Ship 7.33, ABB 4.00, MRPL 3.67, Orient Bank 3.00, and Opto Circuts 1.50.

Among the most active underlying, LITL witnessed contraction of 0.09 million of Open Interest in the June month futures contract followed by IFCI which witnessed contraction of 0.62 million of Open Interest in the near month contract. Meanwhile, GVKPIL witnessed an addition of 10.32 million in the June month futures. Also, RCOM witnessed an addition of 0.88 million in Open Interest in the June month contract. Finally, Jaiprakash Associates witnessed contraction of 1.28 million of Open Interest in the near month futures contract.