Depressing June IIP data, dismal corporate earning propels Nifty to end lower

Indian equity market witnessed another topsy turvy ride on Thursday. Disappointing June IIP data coupled with dismal corporate results including some of the heavyweights like Tata Motors, Ranbaxy and Bharti Airtel weighed heavily on the market. Moreover, fall in European counters after a positive opening too dampened the sentiments. Though, Asian markets went home with green mark on Thursday, as Chinese CPI inflation released overnight dropped to 1.8% y/y in July from 2.2% y/y in June, slightly higher than consensus expectations. But continued decline in inflation is likely to overlay the way for a cut in the reserve requirement soon. However, Bank of Japan ended its two-day meeting this morning as it decided to keep its asset-purchase programme unchanged at JPY45trl and its key interest rate between zero and 0.1%.

Initially, market opened on a positive note tracking strength from firm Asian peers. Moreover, stocks also rallied on hopes of reforms and clarity over tax measures and the index breached its crucial 5,350 mark. But, murky IIP data for the month of June dampened the sentiments and the benchmark started moving downward from its intraday high level. June IIP data registered a negative growth of 1.8% at 168.3 for the month of June 2012 against the growth figure of 2.4% in May, which later was revised a bit to 2.5%. The cumulative growth for the period April-June 2012-13 recorded de-growth of 0.1% over the corresponding period of the previous year. Market continued its downtick movement and entered into the negative terrain following turnaround in European counters after a good start. Market touched its intraday low in the late trade as shares of power equipment manufacturer BHEL and engineering & construction firm L&T saw selling pressure after a sharp decline in capital goods production. Moreover, disappointing quarterly result from Tata Motors, Ranbaxy and Bharti Airtel too dampened the sentiments. However, the last hour recovery helped the markets to end the session near its previous level otherwise the damage could have been grave. Finally, Nifty ended the session with a modest cut of 15 points.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX PSU Bank remained the major loser, down 3.28% followed by Bank Nifty down 0.79% and CNX Infra down by 0.60% while CNX Metal and CNX Auto surged 0.59% and 0.46% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0.24% and reached 16.33.

The India VIX witnessed contraction of 0.24% at 16.33 as compared to its previous close of at 16.37 on Wednesday.

The 50-share S&P CNX Nifty lost 15.05 points or 0.28% to settle at 5322.95.

Nifty August 2012 futures closed at 5350.05 on Thursday at a premium of 27.10 points over spot closing of 5,322.95, while Nifty September 2012 futures were at 5377.20 at a premium of 54.25 points over spot closing. Nifty August futures saw an addition of 0.27 million (mn) units taking the total outstanding open interest (OI) to 23.96 mn units. The near month August 2012 derivatives contract will expire on Thursday i.e. August 30, 2012.

From the most active contracts, Bharti Airtel August 2012 futures were at a premium of 0.55 points at 257.75 compared with spot closing of 257.20. The number of contracts traded was 26,863.

Tata Motors August 2012 futures were trading at a discount of 0.85 points at 240.55 compared with spot closing of 241.40. The number of contracts traded was 52,385.

Tata Steel August 2012 futures were at a premium of 1.95 point at 408.90 compared with spot closing of 406.95. The number of contracts traded was 12,504.

ICICI Bank August 2012 futures were at a premium of 4.20 points at 958.60 compared with spot closing of 954.40. The number of contracts traded was 18,883.

Cairn India August 2012 futures were at a premium of 0.85 point at 320.90 compared with spot closing of 320.05. The number of contracts traded was 13,880.  

Among Nifty calls, 5500 SP from the August month expiry was the most active call with contraction of 0.36 million open interest.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with contraction of 0.09 million open interest.

The maximum OI outstanding for Calls was at 5500 SP (8.50 mn) and that for Puts was at 5000 SP (10.55 mn).

The respective Support and Resistance levels are: Resistance 5356.73 -- Pivot Point 5334.41 -- Support 5300.63.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.49 for August -month contract.

The top five scrips with highest PCR on OI were SKUMARSYNF 6.50, Orient Bank 5.00, WEL Corp 2.47, PTC 2.25, and YES Bank 2.18.