Nifty dips below 5,300 mark on the penultimate day of F&O expiry

Sentiments remained bearish for fourth straight day on Wednesday and Nifty snapped the day’s trade with a cut of about a percent below its crucial 5,300 mark ahead of the expiry of August derivative contracts and first quarter GDP numbers slated to be released on August 31. On the global front, every market across the globe were awaiting decisive move from central bankers’ meet at Jackson Hole on August 31 to solve ongoing Eurozone credit crisis. Meanwhile, Asian shares, after listlessly gyrating for the entire trading session, settled on mixed note. Back home, the RBI governor, Subbarao said that the central bank has been successful in easing price pressures by reducing the inflation rate to 7 percent from 11 percent but also pointed that various factors, including high commodity prices, the fiscal deficit and the monsoon is again pushing it higher.

The Indian equity market made a flat start tracing mixed global cues. Though, it started its southward journey just after few minutes of opening as selling was witnessed in realty space and stocks like DLF, Indiabulls and HDIL slumped by 4-6 percent as worries continued over a stringent land acquisition bill from the government. The Land Acquisition Bill, which was being pushed by Sonia Gandhi-led NAC, is set for further delay with the controversial matter being referred to a Group of Ministers (GoM) because of opposition by a number of Cabinet ministers. Market continued its downward trend as sentiments got clobbered after banking sector, after trading in the green for most part of the day’s trade, ended with cut of about half a percent after the RBI governor reiterated that inflation remained the key threat for the economy, dashing hopes of a rate cut in September. Market breached its crucial 5,300 mark in noon trade following sluggish opening in European counters. Some pressure also came in from Auto space, which tumbled about one and half a percent on concerns that sales growth in August would remain subdued on account of high interest rates on auto loans and rising fuel prices. However, continuous buying in FMCG space supported the sentiments up to certain extent but remained unable to stop the downside. Finally, Nifty ended the day’s trade near its intraday low with a cut of about fifty points.

Meanwhile, most of the sectoral indices on the NSE were settled in the red, CNX Realty remained the major loser, down 3.40% followed by CNX Metal down 1.74% and CNX Auto down 1.44% while CNX FMCG and CNX Pharma surged 0.51% and 0.09% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 2.39% and reached 16.74.

The India VIX witnessed an addition of 0.39% at 16.74 as compared to its previous close of at 16.35 on Tuesday.

The 50-share S&P CNX Nifty lost 46.80 points or 0.88% to settle at 5,287.80.

Nifty August 2012 futures closed at 5296.60 on Wednesday at a premium of 8.80 points over spot closing of 5,287.80, while Nifty September 2012 futures were at 5327.80 at a premium of 40.00 points over spot closing. Nifty August futures saw a contraction of 4.10 million (mn) units taking the total outstanding open interest (OI) to 16.16 mn units. The near month August 2012 derivatives contract will expire on Thursday i.e. August 30, 2012.

From the most active contracts, JP Associates September 2012 futures were at a premium of 0.05 points at 63.75 compared with spot closing of 63.70. The number of contracts traded was 13,139.

JP Associates August 2012 futures were trading at a premium of 0.20 points at 63.90 compared with spot closing of 63.70. The number of contracts traded was 15,693.

Tata Motors August 2012 futures were at a discount of 0.90 point at 233.35 compared with spot closing of 234.25. The number of contracts traded was 14,376.

United Spirits September 2012 futures were at a premium of 2.25 points at 985.25 compared with spot closing of 983.00. The number of contracts traded was 14,977.

ICICI Bank August 2012 futures were at a premium of 4.30 point at 918.95 compared with spot closing of 914.65. The number of contracts traded was 15,468. 

Among Nifty calls, 5400 SP from the August month expiry was the most active call with an addition of 1.52 million open interest.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with contraction of 0.05 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (10.05mn) and that for Puts was at 5000 SP (9.43mn).

The respective Support and Resistance levels are: Resistance 5327.96 -- Pivot Point 5305.33 -- Support 5265.16.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.45 for August -month contract.

The top five scrips with highest PCR on OI were Orient Bank 4.00, WELCORP 1.66, Ambuja Cement 1.60, TCS 1.56 and IDFC 1.52. 

Among the most active underlying, IFCI witnessed contraction of 14.94million of Open Interest in the August month futures contract followed by RCOM which witnessed contraction of 10.10 million of Open Interest in the near month contract. Meanwhile, JP Associates witnessed contraction of 2.54 million in the August month futures. Also, Hindalco witnessed contraction of 3.38 million in Open Interest in the August month contract. Finally, Bharti Airtel witnessed contraction of 4.01 million of Open Interest in the near month futures contract.