Weak global cues rattle market again; Nifty manages to hold 5,400 mark

The fifty stock index -- Nifty -- continued its southward journey for second consecutive day on Wednesday and finished the day’s trade with a cut of about a percent after witnessing bloodbath throughout the day on the back of weak cues from global peers. Earlier, the Indian equity market made a gap down start on the back of weak cues from global equity indices. Moreover, continued selling by foreign funds and retail investors too dampened the sentiments. In the late morning session, the local index extended its downfall, in wake of the negative cues worldwide, while weak opening in European counterparts too added some nervousness in the market and the index breached its crucial 5,400 mark in early noon trade but, the benchmark got some support near that level and pared its losses as India’s service sector activity for July 2011 grew at the fastest pace in three months, buoyed by strong momentum in new business but input cost pressure accelerated. Moreover, the PSU oil marketing companies viz., BPCL, HPCL and IOC all ended higher by 1-2 percent in the trade, on the back of slump in international crude prices, also the Finance Minister Pranab Mukherjee has said that the government will soon introduce a new system for distribution of liquefied petroleum gas (LPG), under which it will provide direct cash subsidy to the poor. In mid afternoon trade, market again witnessed some pressure and fell below its psychological 5,400 level. Meanwhile, Sugar stocks like Shree Renuka Sugar, EID Parry Triveni Engineering and Rana Sugars all edged lower in the trade as the government released higher non-levy sugar quota for August. Finally, Nifty ended the sluggish day of trade with a cut of about a percentage point but, managed to close over its crucial 5,400 mark, led by last half an hour of recovery in rate sensitive sectors like Realty, Infra and Banking.

On the global front, The US markets witnessed a dismal day of trade overnight and all the major indices showed a free fall closing lower by over two percent each while, all the Asian equity indices ended the day’s trade in the negative terrain on Wednesday following weak closing of Wall Street. Moreover, most of the European counterparts were trading in the red where, major indices like DAX and FTSE all were down by over a percent at this point of time. Back home, most of the sectoral indices on the NSE settled in the negative territory with CNX Infra losing the most, ending with a cut of over one and half a percent followed by CNX Realty down by 1.28% and CNX Pharma down by 1.04% while, CNX FMCG up 0.31% and CNX PSE 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, rose 1.72% and reached 19.48, while S&P Nifty dropped by 51.75 points or 0.95% to close at 5,404.80.

The India VIX closed up by 1.72% at 19.48 on Wednesday as compared to 19.15 on Tuesday 

The 50-share S&P CNX Nifty declined by 51.75 points or 0.95% and settled at 5,404.80.

Nifty August 2011 futures closed at 5,429.45, at a premium of 24.65 point over spot closing of 5,404.80, while Nifty September 2011 futures were at 5,446.10 at a premium of 41.30 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 17.76% or 3.71 million (mn) units, taking the total outstanding open interest (OI) to 24.65 mn units.

From the most active contract by contract value, Bharti Airtel August 2011 futures closed at a premium of 0.65 points at 426.90 compared with spot closing of 426.25. The number of contracts traded was 20,354.

SBI’s August 2011 futures were at a premium of 11.15 point at 2298.15 compared with spot closing of 2287.00. The number of contracts traded was 21,257.

L&T August 2011 futures were at a discount of 6.05 at 1654.60 compared with spot closing of 1660.65. The number of contracts traded was 12,791.

ICICI Bank August 2011 futures were at a premium of 4.60 at 1011.10 compared with spot closing of 1006.50. The number of contracts traded was 20,812.

JSW Steel August 2011 futures were at a premium of 3.80 at 713.50 compared with spot closing of 709.70. The number of contracts traded was 27,886.

Among Nifty calls, 5500 SP from the August month expiry was the most active call with addition of 0.80 million or 14.45%.

Among Nifty puts, 5400 SP from the August month expiry was the most active put with addition of 0.23 million or 3.40%.

The maximum Call OI outstanding for Calls was at 5600 SP (6.35 mn) and that for Puts was at 5500 SP (6.87 mn).

The respective Support and Resistance levels are: Resistance 5425.31 -- Pivot Point 5402.08 -- Support 5381.56.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.01 for August -month contract.

The top five scrips with highest PCR on OI were Tata Chemicals 3.00, Sun Pharmaceuticals Industries 2.20, Jindal Saw 2.00, Jain Irrigation System2.00,  Ambuja Cement 1.37.

Among most active underlying, JSW Steel witnessed an addition of 5.20% of Open Interest (OI) in the August month futures contract followed by Bharti Airtel witnessed an addition of 6.47% of Open Interest (OI) in the near month contract. Meanwhile State Bank of India witnessed an addition of 3.43% of OI in the August month futures.