Nifty surrenders gain as RBI measures fail to cheer markets

Erasing all day’s gains, Nifty snapped the session with a cut of over half a percent on Monday as the measures announced by the Reserve Bank of India (RBI) failed to meet market expectations. On the global front, most of the Asian equity indices ended the day’s trade in the red on the back of low global growth prospect and increasing tension of the Euro zone debt crisis that is spreading across southern Europe while, European shares fell on Monday as persistent fears about Europe’s debt crisis and fresh concerns about global economic growth soured investors’ appetite for risk. Back home, banking, FMCG, metal, realty, IT, auto, pharma and infra indices also ended in the red. At the same time, media index was the only gainer on the NSE. 

The Indian equity market made a positive start recapturing its crucial 5,150 mark and traded firm afterwards for most part of the day, anticipating bold move from the government and the central bank. Market traded on a firm note till mid afternoon trade and touched its intraday high near its crucial 5,200 mark on hopes that the government’s new stimulus measures will boost the currency and economy. Moreover, appreciation in rupee also boosted the trading sentiments. But, Nifty witnessed trend reversal and started falling downward as RBI announced lower than expected measures. In a move to attract foreign funds, the RBI has increased the FII limit for investment in government securities by $5 billion to $20 billion. The central bank has also allowed SEBI to register long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks, to also invest in government bonds for the entire limit of $20 billion. Moreover, weak trade in European counters too dampened the investors’ sentiment. Finally Nifty surrendered all its initial gains and snapped the day’s trade near its intraday low with a cut of 30 points.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX PSU Bank remained the major loser, down 1.29% followed by Bank Nifty down 1.12% and CNX Infra down 0.79% while CNX Media surged 0.69% remained the lone gainer in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 4.81% and reached 21.57.

The India VIX witnessed an addition of 4.81% at 21.57 as compared to its previous close of at 20.58 on Friday.

The 50-share S&P CNX Nifty lost 31.40 by point or 0.61% to settle at 5,114.65.

Nifty June 2012 futures closed at 5,109.30 at a discount of 5.35 points over spot closing of 5,114.65, while Nifty July 2012 futures were at 5,133.65 at a premium of 19.00 points over spot closing. The near month June 2012 derivatives contract will expire on Thursday i.e. June 28, 2012. Nifty June futures saw an addition of 0.35 million (mn) units taking the total outstanding open interest (OI) to 17.23 mn units.

From the most active contract, HDIL June 2012 futures were at a discount of 0.10 point at 82.95 compared with spot closing of 83.05. The number of contracts traded was 21,507.

Tata Motors June 2012 futures were at a premium of 0.60 point at 246.10 compared with spot closing of 245.50. The number of contracts traded was 16,382.

Tata Steel June 2012 futures were at a premium of 2.55 point at 414.90 compared with spot closing of 412.35. The number of contracts traded was 21,567.

Tata Steel July 2012 futures were at a discount of 13.45 point at 398.90 compared with spot closing of 412.35. The number of contracts traded was 15,522.

ICICI Bank June 2012 futures were at a premium of 2.90 point at 846.80 compared with spot closing of 843.90. The number of contracts traded was 24,701.   

Among Nifty calls, 5200 SP from the Jun month expiry was the most active call with an addition of 1.19 million open interest.

Among Nifty puts, 4800 SP from the Jun month expiry was the most active put with contraction of 0.03 million open interest.

The maximum OI outstanding for Calls was at 5200 SP (8.24mn) and that for Puts was at 4800 SP (8.98mn).

The respective Support and Resistance levels are: Resistance 5170.95-- Pivot Point 5138.3--Support 5082.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.77 for June-month contract.

The top five scrips with highest PCR on OI were Welcorp 12.00, ABG Ship 5.83, Orient Bank 5.00, TATA Chemical 3.00 and ABB 2.50

Among the most active underlying, Suzlon witnessed contraction of 27.57 million of Open Interest in the June month futures contract followed by IFCI which witnessed contraction of 4.56 million of Open Interest in the near month contract. Meanwhile, LITL witnessed contraction of 11.13 million in the June month futures. Also, RCOM witnessed contraction of 8.36 million in Open Interest in the June month contract. Finally, Unitech witnessed contraction of 8.57 million of Open Interest in the near month futures contract.