Nifty snaps nine-day rally amid weak global cues

After exhibiting sharp run-up in the last nine consecutive sessions, S&P CNX Nifty snapped its winning streak to end marginally lower on Tuesday, amid weak global cues, as investors opted to book profit after recent gains. The global cues too remain subdued as Asian stocks ended lower on the back of profit-taking after last week's huge gains sparked by the US Federal Reserve stimulus plan and following losses on Wall Street. The European counters were trading in the red at this point of time as investors turned their attention from central bank’s stimulus to slowing global growth and uncertainty about Spain's desire for an international aid package.

Earlier, the benchmark made a flat start on weak global cues as investors opted to take some profit off the table after the series of gains. The sentiments turned negative after Indian consumer prices index (CPI) crept higher in the month of August, entering double digit figure at 10.03 percent, driven by the rise in food inflation. August CPI food inflation accelerated to 12.03 percent from 11.53 percent a month earlier. Market traded near its pre-close level till late morning trade but, the index lost some more ground and dipped below its crucial 5,600 mark following weakness in European markets. Moreover, some sense of cautiousness was also drawn on account of political drama in the country, as Mamta Banerjee led Trinamool Congress is expected to take some decision on its support to Congress-led United Progressive Alliance (UPA) government, after its 72-hour deadline to rollback diesel price hike, remove the cap on subsidised LPG cylinders and disallow foreign direct investment (FDI) in multi-brand retail ends on Tuesday evening. The pessimism also prevailed in the market after Industry body ASSOCHAM said that it is deeply disappointed by the Reserve Bank of India's decision to leave interest rates unchanged. However, the market witnessed some recovery in late trade supported by banking stocks, which advanced for the second straight day after RBI announced a reduction of 25 basis points in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand. The sentiments also got some respite after shares of sugar manufacturing companies remained in demand with most of the frontline stocks up by over 4 percent on expectation of huge demand ahead of the festive season. Finally, Nifty held its crucial 5,600 level back and ended with a marginal loss of 10 points.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 4.80% followed by CNX Media up 1.69% and Bank Nifty up by 0.56% while CNX Energy and CNX IT declined 1.15% and 0.42% remained the top losers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 0.28% and reached 17.83.

The India VIX witnessed an addition of 0.28% at 17.83 as compared to its previous close of at 17.78 on Monday. The 50-share S&P CNX Nifty lost 9.95 points or 0.18% to settle at 5,600.05.

Nifty September 2012 futures closed at 5612.25 on Tuesday at a premium of 12.20 points over spot closing of 5,600.05, while Nifty October 2012 futures were at 5634.90 at a premium of 34.85 points over spot closing. Nifty September futures saw an addition of 0.43 million (mn) units taking the total outstanding open interest (OI) to 21.63 mn units. The near month September 2012 derivatives contract will expire on Thursday i.e. September 27, 2012.

From the most active contracts, IFCI September 2012 futures were trading at a premium of 0.15 at 32.15 compared with spot closing of 32.00. The number of contracts traded was 12,487.

JP Associates September 2012 futures were trading at a discount of 0.20 at 79.70 compared with spot closing of 79.90. The number of contracts traded was 11,221.

Tata Motors September 2012 futures were at a premium of 0.55 point at 273.80 compared with spot closing of 273.25. The number of contracts traded was 13,589.

BHEL September 2012 futures were flat compared with spot closing of 224.65. The number of contracts traded was 12,139.

ICICI Bank September 2012 futures were at a premium of 2.65 point at 1052.30 compared with spot closing of 1049.65. The number of contracts traded was 19,031.

Among Nifty calls, 5700 SP from the September month expiry was the most active call with  an addition  of 0.88 million open interest.

Among Nifty puts, 5300 SP from the September month expiry was the most active put with contraction of 0.09 million open interest.

The maximum OI outstanding for Calls was at 5700 SP (7.07 mn) and that for Puts was at 5300 SP (8.41 mn).

The respective Support and Resistance levels are: Resistance 5618.25 -- Pivot Point 5602.35 --Support 5584.15.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.54 for September-month contract.

The top five scrips with highest PCR on OI were Bharat Forg 2.25, Jindal Steel 1.98, LT 1.94, Tata Motors 1.71, and DLF 1.50.

Among the most active underlying, IFCI witnessed contraction of 3.51 million of Open Interest in the September month futures contract followed by JP Associates, which witnessed an addition of 1.17 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed contraction of 0.98 million in the September month futures. Also, Renuka witnessed an addition of 4.40 million in Open Interest in the September month contract. Finally, Tata Motors witnessed contraction of 0.70 million of Open Interest in the near month futures contract.