Nifty skids lower for third day in a row; stocks in CAG report weigh

Indian benchmark Nifty extended its southward journey amid choppy session and snapped the day’s trade below its crucial 5,350 mark ahead of the derivatives expiry later this week. On the global front, most Asian markets fell today on the back of global worries about the impact of euro zone debt crisis. While, European counters too exhibited sluggish trend in the early session after Joerg Asmussen, a member of the European Central Bank (ECB) dented hopes of further stimulus from the region's central bank. In addition, Spain’s economic recession deepened in the second quarter. Final data released showed that GDP contracted at a faster pace, both on an annual and a quarterly basis during the April-June quarter. Back home, majority of stocks related to companies, which were named in the list of coal scam disclosed by the Comptroller and Auditor General (CAG) last week, witnessed selling pressure.

Initially, benchmark made a flat start and traded near its pre-close level till late morning session due to lack of domestic as well as global trigger. But a sharp wave of selling pressure emerged in noon trades, which pushed the index below its crucial 5,350 bastions. The major reason for the downfall is adjournment of parliament for the sixth day as BJP stuck to its demand for the resignation of Prime Minister Manmohan Singh on the coal block allocation issue. In addition, delay in the major reform due to continuous impasse in the parliament also added to the bout of pessimism in investors’ mind. The mood also remain subdued after banking stocks saw selling pressure for a second day ahead of the June quarter GDP data announcement on Friday. There is also pessimism that the central bank will hold on to key rates despite headline inflation falling below the 7 percent mark. The market touched its intraday low near its crucial 5,300 level following sluggish opening in European markets. Moreover, metal counter too led the downfall as the sector continued its south bound journey for yet another day and remained the top laggard, losing over two and half a percent on concerns that demand would be lower on the back of weakening economic scenario in China after government data showed that profits of major industrial enterprises declined by 5.4% in July. However, some amount of recovery was witnessed in the dying hours, which helped the index to come out of its lows supported by FMCG pack, which edged higher on reports of revival of monsoon rains this month. Though, the recovery was not strong enough to put the benchmark out of their blues, leading to another red close.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Metal remained the major loser, down 2.79% followed by CNX Media down 1.45% and CNX Auto down by 1.00% while CNX IT and CNX FMCG surged 0.77% and 0.74% respectively remained the only gainers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0.73% and reached 16.35.

The India VIX witnessed contraction of 0.73% at 16.35 as compared to its previous close of at 16.47 on Monday.

The 50-share S&P CNX Nifty lost 15.65 points or 0.29% to settle at 5,334.60.

Nifty August 2012 futures closed at 5346.05 on Tuesday at a premium of 11.45 points over spot closing of 5,334.60, while Nifty September 2012 futures were at 5378.10 at a premium of 43.50 points over spot closing. Nifty August futures saw a contraction of 3.22 million (mn) units taking the total outstanding open interest (OI) to 20.26 mn units. The near month August 2012 derivatives contract will expire on Thursday i.e. August 30, 2012.

From the most active contracts, Tata Motors August 2012 futures were at a premium of 0.65 points at 237.75 compared with spot closing of 237.10. The number of contracts traded was 15,367.

Tata Steel August 2012 futures were trading at a premium of 0.95 points at 378.85 compared with spot closing of 377.90. The number of contracts traded was 16,215.

ICICI Bank August 2012 futures were at a premium of 4.30 point at 925.40 compared with spot closing of 921.10. The number of contracts traded was 23,397.

ICICI Bank September 2012 futures were at a premium of 10.35 points at 931.45 compared with spot closing of 921.10. The number of contracts traded was 15,813.

SBI August 2012 futures were at a premium of 9.05 point at 1848.50 compared with spot closing of 1839.45. The number of contracts traded was 48,106.  

Among Nifty calls, 5500 SP from the August month expiry was the most active call with contraction of 1.43 million open interest.

Among Nifty puts, 5300 SP from the August month expiry was the most active put with contraction of 1.26 million open interest.

The maximum OI outstanding for Calls was at 5500 SP (9.13mn) and that for Puts was at 5300 SP (9.58 mn).

The respective Support and Resistance levels are: Resistance 5358.36 -- Pivot Point 5335.48 -- Support 5311.71.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.70 for August -month contract.

The top five scrips with highest PCR on OI were Orient Bank 4.00, WELCORP 2.29, M&M 1.62, IDFC 1.54 and HCL Tech 1.47. 

Among the most active underlying, IFCI witnessed contraction of 19.20 million of Open Interest in the August month futures contract followed by RCOM which witnessed contraction of 9.89 million of Open Interest in the near month contract. Meanwhile, JP Associates witnessed contraction of 6.32 million in the August month futures. Also, Renuka witnessed contraction of 7.79 million in Open Interest in the August month contract. Finally, Hindalco witnessed contraction of 4.16 million of Open Interest in the near month futures contract.