Bulls take a breather; auto shares fall

After a massive triple digit rally in previous session, the domestic index Nifty witnessed consolidation on Monday as investors booked their profits at higher levels. On the global front, most of the Asian markets erased their initial gains, though ended in the green, as reports showed that Chinese manufacturing data slowed down tempering optimism over last week’s agreement in Europe to solve the regions’ debt crisis. Moreover, European equities were around seven-week highs, but gains remained capped by the weakening growth outlook. Back home, FMCG, auto and IT sectors led the declines while realty, metals and banks provided some support.

Initially, the domestic index after getting a muted start turned choppy, as funds and retail investors relentlessly pocketed profit after previous session’s strong rally. Moreover, fall in software pack after foreign brokerage downgraded the sector, also deterred the sentiments. Macquarie Equities Research has downgraded IT services sector to ‘underweight’ from ‘overweight’ citing demand concerns as Infosys, which already has 30 percent of staff on the bench and delayed joining dates for new hires. Afterwards, market continued its choppy run and traded near its equator as sentiments also remained dampened by mixed Auto June sales figures. Country's second largest two-wheeler maker Bajaj Auto reported a 1.38% decrease in its motorcycle sales in June at 318,377 units on y-o-y basis. However, Maruti Suzuki India (MSI) has reported 20.30% surge in sales to 96,597 units during June, 2012. Meanwhile, on the macro front, India's factories in June stepped up production and hired workers at the fastest rate in more than two years, but sagging demand abroad took a toll on growth in new export orders, a survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI) rose to 55.0 in June, a four-month high, from 54.8 in May. It was above the 50 mark that divides growth and contraction for more than three years. But, market gained strength in the last leg of trade and touched its crucial 5,300 mark. The main push came up from the firm trade in European markets. But, the rally proved short lived as market-men again booked profit at higher levels. Finally, Nifty snapped the day’s trade near its previous close.

Back home, on NSE sectoral space CNX FMCG losing the most, ending with a cut of 2.15% followed by CNX Auto down by 0.57% and CNX IT down by 0.39% while, CNX Realty up 2.27% and CNX PSU Bank up by 0.73% remained top gainers. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0.36% and reached 19.01.

The India VIX witnessed contraction of 0.37% at 19.01 as compared to its previous close of at 19.08 on Friday.

The 50-share S&P CNX Nifty lost 0.30 points or 0.01% to settle at 5,278.60.

Nifty July 2012 futures closed at 5,295.60 at a premium of 17.00 points over spot closing of 5,278.60, while Nifty August 2012 futures were at 5320.90 at a premium of 42.30 points over spot closing. The near month July 2012 derivatives contract will expire on Thursday i.e. July 26, 2012. Nifty July futures saw an addition of 0.37 million (mn) units taking the total outstanding open interest (OI) to 22.01 mn units.

From the most active contract, Tata Motors July 2012 futures were at a discount of 2.00 point at 235.80 compared with spot closing of 237.80. The number of contracts traded was 12,467.

HDIL July 2012 futures were at a premium of 0.45 point at 89.30 compared with spot closing of 88.85. The number of contracts traded was 9,765.

Cairn India July 2012 futures were at a discount of 1.40 point at 311.90 compared with spot closing of 313.30. The number of contracts traded was 9,053.

ITC July 2012 futures were at a premium of 4.20 points at 252.20 compared with spot closing of 248.00. The number of contracts traded was 10,273.

Tata Steel July 2012 futures were at a discount of 10.70 point at 433.70 compared with spot closing of 444.40. The number of contracts traded was 13,864.   

Among Nifty calls, 5400 SP from the July month expiry was the most active call with an addition of 0.66 million open interest.

Among Nifty puts, 5000 SP from the July month expiry was the most active put with an addition of 0.15 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (5.26mn) and that for Puts was at 5000 SP (6.40mn).

The respective Support and Resistance levels are: Resistance 5299.38-- Pivot Point 5281.36--Support 5260.58. The Nifty Put Call Ratio (PCR) OI wise stood at 1.49 for July -month contract.

The top five scrips with highest PCR on OI were APIL 2.00, PNB 1.58, DIVISLAB 1.50, ACC 1.42, and MRPL 1.33.

Among the most active underlying, Suzlon witnessed an addition of 9.31 million of Open Interest in the July month futures contract followed by IFCI which witnessed an addition of 0.30 million of Open Interest in the near month contract. Meanwhile, LITL witnessed contraction of 0.36 million in the July month futures. Also, UNITECH witnessed an addition of 2.38 million in Open Interest in the July month contract. Finally, RCOM witnessed an addition of 0.69 million of Open Interest in the near month futures contract.