Late hour sell-off drags Nifty below 5,150 level

The local benchmark -- Nifty -- ended the volatile day of trade in the red with a cut of about half a percent as investors booked their profits on every rise ignoring positive cues from Europe. Moreover, the rise in food inflation raised concerns of possible rate hike by the Reserve Bank of India (RBI). Earlier, the Indian equity market opened in the red losing its crucial 5,150 level but trimmed its initial losses and traded with a moderate cut in the early trade ignoring the yesterday’s sharp fall in global markets on talks of credit rating downgrade in France, which too commands AAA rating. In the late morning trade, the index touched the green land for a while as index heavyweight Reliance Industries reversed its initial losses but, the index witnessed a steep fall of about 20 points on the back of rise in food inflation which increased the worries of possible rate hike by the RBI. India’s food price index rose 9.90 percent for week ended July 30 against 8.04 percent a week ago. Fuel price index climbed 12.19 percent against 12.12 per cent. The primary articles index was up 12.22 percent, compared with an annual rise of 10.99 percent a week earlier. But once again market showed some traction and regained its crucial 5,150 mark as European market opened on a strong note. The up move was also supported by Telecom stocks as companies like Tata Communication, Reliance Communication and Idea Cellular all remained higher in the trade after Department of Telecom (DoT) decided to give the Telecom Regulatory Authority of India (TRAI) more powers regarding spectrum management to obtain reviews and recommendations on the entire range of present spectrum usage. Market traded in the positive terrain till mid noon but it was the last hour of trade where market lost its ground and snapped the trade below its crucial 5,150 mark with a cut of about half a percent due to selling pressure in frontline stocks like ICICI Bank, Bharti Airtel and Tata Power, shrugging off firm cues from Europe.

On the global front, the US markets got hammered again on Wednesday, recoiling all their gains of previous session while, most of the Asian equity indices finished the day’s trade in the negative terrain on Thursday but closed off their early lows as bargain buyers circled back into equities on attractive valuations. Moreover, most of the European counterparts were trading on a mixed note at this point of time after a firm start. Back home, most of the sectoral indices on the NSE settled in the negative territory with Bank Nifty losing the most and ending with a cut of over a percent followed by CNX Realty, down 1.13% and CNX Infra down 1.05% while, CNX FMCG up by 0.19% remained the lone gainer in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 0.48% and reached 29.09, while S&P Nifty declined by 22.70 points or 0.44% to close at 5,138.30.

The India VIX closed up by 0.48% at 29.09 on Thursday as compared to 28.95 on Wednesday.

The 50-share S&P CNX Nifty lost 22.70 points or 0.44% and settled at 5,138.30.

Nifty August 2011 futures closed at 5,128.00, at a discount of 10.30 point over spot closing of 5,138.30, while Nifty September 2011 futures were at 5,141.85 at a premium of 3.55 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 8.49% or 1.92 million (mn) units, taking the total outstanding open interest (OI) to 24.55 mn units.

From the most active contract by contract value, Tata Motors August 2011 futures closed at a discount of 8.00 points at 842.00 compared with spot closing of 850.00. The number of contracts traded was 29,222.

SBI’s August 2011 futures were at a premium of 5.15 point at 2246.50 compared with spot closing of 2241.35. The number of contracts traded was 20,362.

ICICI Bank August 2011 futures were at a premium of 2.55 at 944.55 compared with spot closing of 942.00. The number of contracts traded was 18,560.

Tata Steel August 2011 futures were at a premium of 0.40 at 484.10 compared with spot closing of 483.70. The number of contracts traded was 14,452.

Axis Bank August 2011 futures were at a premium of 3.00 at 1215.00 compared with spot closing of 1212.00. The number of contracts traded was 9,499.

Among Nifty calls, 5200 SP from the August month expiry was the most active call with decline of 0.29 million or 6.20%.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with an addition of 0.76 million or 15.87%.

The maximum Call OI outstanding for Calls was at 5100 SP (5.05 mn) and that for Puts was at 5000 SP (5.58 mn).

The respective Support and Resistance levels are: Resistance 5175.16 -- Pivot Point 5148.08-- Support 5111.21.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.98 for August -month contract.

The top five scrips with highest PCR on OI were Bombay Rayon Fashions 7.00, MRF 4.00, JSW Energy 1.50, Sun Pharmaceuticals Industries 1.47 and Maruti Suzuki 1.21.

Among most active underlying, Tata Motors witnessed an addition of 7.99% of Open Interest (OI) in the August month futures contract followed by State bank of India which witnessed an addition of 4.90% of Open Interest (OI) in the near month contract. Meanwhile Reliance witnessed an addition of 0.46% of OI in the August month futures.