Late sell off drags Nifty below 5,350 mark

The fifty stock index -- Nifty -- witnessed bloodbath in the late trade and snapped the day’s trade with a cut of over a percent on concerns of slowing global growth and rise in food inflation on the domestic front. The index continued its southward journey for third consecutive day on Thursday as decline in auto, realty, banking stocks weighed on the sentiments. Earlier, after a flat start, the Indian equity market traded firmly till mid morning session as short covering was witnessed in most of the blue chip stocks. Moreover, PSU oil marketing companies also supported the up-move as BPCL, HPCL and IOC all remained in jubilant mood after international crude oil prices extended decline and reached near their five weeks low on Wednesday. In the late morning trade, market pared all its initial gains and turned red as selling pressure on index heavyweights like ITC, Bharti Airtel and Mahindra & Mahindra increased. The investors even overlooked the rise in food inflation initially as European market opened firm and the index traded near its neutral line in early noon trade.  But, in the late trade, market lost its way and breached its crucial 5,400 mark witnessing massacre. Weekly inflation data released by the commerce ministry showed that India’s wholesale food prices rose by 8.04% year-on-year in the week ended July 23, 2011, faster than the 7.33% year-on-year inflation recorded in the week ended July 16. While, European counterparts reversing all their initial gains too dampened the sentiments. Meanwhile, the reports stating that India’s key monsoon rains were 22 percent below normal in the week to August 3, also hurt the sentiments and the local market breached its psychological 5,350 mark in the final hour of trade. Finally, Nifty ended the lethargic day of trade well below its crucial 5,350 mark with a cut of over a percentage point after banking stocks declined, reversing intraday gains, on worries that higher lending rates will crimp loan growth.

On the global front, the US markets witnessed a mild pullback overnight on getting good jobs data while, most of the Asian equity indices finished the day’s trade in the negative terrain on Thursday as investors remained concerned about the US economic outlook. Moreover, most of the European counterparts were trading in the red at this point of time after a firm start. Back home, all the sectoral indices on the NSE were hammered badly and settled in the negative territory with CNX Realty losing the most, ending with a cut of over two percent followed by CNX FMCG down by 2.03% and CNX Pharma down by 1.59% on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 5.58% and reached 20.22, while S&P Nifty dropped by 73 points or 1.35% to close at 5,331.80.

The India VIX closed up by 5.59% at 20.22 on Thursday as compared to 19.15 on Wednesday 

The 50-share S&P CNX Nifty dropped 73.00 points or 1.35% and settled at 5,331.80.

Nifty August 2011 futures closed at 5,339.80, at a premium of 8.00 point over spot closing of 5,331.80, while Nifty September 2011 futures were at 5,355.00 at a premium of 23.20 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 10.25% or 2.35 million (mn) units, taking the total outstanding open interest (OI) to 25.30 mn units.

From the most active contract by contract value, SBI’s August 2011 futures closed at a premium of 3.40 points at 2257.90 compared with spot closing of 2254.50. The number of contracts traded was 19,135.

JSW Steel August 2011 futures were at a discount of 0.40 point at 682.50 compared with spot closing of 682.90. The number of contracts traded was 23,990.

ICICI Bank August 2011 futures were at a premium of 1.50 at 992.50 compared with spot closing of 991.00. The number of contracts traded was 16,206.

RIL August 2011 futures were at a premium of 2.20 at 813.20 compared with spot closing of 811.00. The number of contracts traded was 18,632.

Tata Motors August 2011 futures were flat at 915.00 compared with spot closing of 915.00. The number of contracts traded was 16,155.Among Nifty calls, 5500 SP from the August month expiry was the most active call with addition of 1.58 million or 25.94%.

Among Nifty puts, 5400 SP from the August month expiry was the most active put with decline of 1.18 million or 18.06%.

The maximum Call OI outstanding for Calls was at 5600 SP (7.66 mn) and that for Puts was at 5500 SP (5.37 mn).

The respective Support and Resistance levels are: Resistance 5403.15 -- Pivot Point 5363.15 -- Support 5291.8.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.87 for August -month contract.

The top five scrips with highest PCR on OI were Tata Chemicals 3.00, Jindal Saw 2.00, Sun Pharmaceuticals Industries 1.48, JSW Energy 1.25 and Ambuja Cement 1.01.

Among most active underlying, Reliance witnessed an addition of 2.02% of Open Interest (OI) in the August month futures contract followed by JSW Steel witnessed a decline of 1.18% of Open Interest (OI) in the near month contract. Meanwhile State Bank of India witnessed an addition of 1.68% of OI in the August month futures.