Nifty resumes southward journey on global worries; hits 52 week low

Nifty resumed its southward journey after a day of halt and clobbered out of shape, closing the session below its crucial 4,950 mark hitting its 52 week low with a triple digit cut as selling pressure intensified across the board following weak global cues while, concerns of possible rate hike on domestic front too dampened the sentiments. Earlier, the Indian equity market made a positive start but immediately reversed all its initial gains as weak Asian shares weighed on sentiment while, sustained selling by foreign funds also dampened the sentiments. Market continued to waning till mid morning trade and breached its crucial 5,000 mark as investors remained concerned on lingering economic worries. Meanwhile, the weekly inflation numbers showed that India’s food price index moderated to 9.03% in the year to August 6 against 9.90% in the previous week, but the ease in food inflation numbers failed to provide any kind of support to the domestic sentiments. The situation got worse as the reading of the fuel price index climbed 13.13% in the period against 12.19% last week moreover, subdued start in European counterparts too pressed the panic button and the local index continued its downfall. The benchmark continued to fall till end in the absence of any support either from global or from domestic front. The software space witnessed bloodbath after Dell's disappointing outlook overnight fueled concerns about a slowing down global economy. Stocks like, Wipro, Infosys and TCS all ended the day with a cut of 4-5 percent, moreover, Banking counters too dampened the sentiments as stocks like BOB, IDBI Bank, PNB, Bank of India, SBI, Axis Bank, ICICI Bank, and Union Bank of India were massacred in the trade on concerns that higher interest rates may crimp credit growth. Finally, Nifty ended the lethargic day of trade with a huge cut of over 100 points breaching its crucial 4,950 mark.

On the global front, the US market closed mixed overnight while Dow and S&P gained marginally, Nasdaq was weighed down by forecast of weaker sales by Dell Inc. While, Most of the Asian equity indices finished the day’s trade in the negative terrain on Thursday as global economic uncertainty shook confidence and Japan’s strong yen continued to bite. Moreover, all the European counterparts were bleeding badly and the major indices like CAC, DAX and FTSE were trading with a cut of 2-4 percent at this point of time. Back home, all the sectoral indices on the NSE were hammered badly and settled in the negative territory with CNX IT losing the most, ending with a cut of four percent followed by CNX PSU Bank down by 3.73% and Bank Nifty down by 3.53% on NSE sectoral space.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 7.73% and reached 27.45, while S&P Nifty dropped by 112.45 points or 2.22% to close at 4,944.15.

Nifty August 2011 futures closed at 4,931.10, at a discount of 13.05 points over spot closing of 4,944.15, while Nifty September 2011 futures were at 4,940.00 at a discount of 4.15 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 12.04% or 2.69 million (mn) units, taking the total outstanding open interest (OI) to 25.07 mn units.

From the most active contract by contract value, SBI’s August 2011 futures closed at a discount of 11.70 point at 2060.30 compared with spot closing of 2072.00. The number of contracts traded was 40,917.

ICICI Bank August 2011 futures were at a premium of 0.30 point at 863.45 compared with spot closing of 863.15. The number of contracts traded was 34,617.

HDFC Bank August 2011 futures were at a discount of 1.60 point at 459.00 compared with spot closing of 460.60. The number of contracts traded was 15,495.

Infosys August 2011 futures were at a premium of 6.00 point at 2368.00 compared with spot closing of 2362.00. The number of contracts traded was 15,006.

Axis Bank August 2011 futures were at a discount of 1.00 point at 1107.00 compared with spot closing of 1108.00. The number of contracts traded was 15,690. Among Nifty calls, 5100 SP from the August month expiry was the most active call with addition of 0.64 million or 15.3%.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with contraction of 0.83 million or 11.95%.

The maximum Call OI outstanding for Calls was at 5100 SP (4.84 mn) and that for Puts was at 5000 SP (6.11 mn).

The respective Support and Resistance levels are: Resistance 5037.78-- Pivot Point 4984.96 -- Support 4891.33.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.88 for August-month contract.

The top five scrips with highest PCR on OI were Bombay Rayon Fashions 10.00, Bombay Dyeing 8.33, Zee Entertainment Enterprises 4.40, Hotel Leela Venture 2.80 and Max India 2.00.

Among most active underlying, SBI witnessed an addition of 10.18% of Open Interest (OI) in the August month futures contract followed by ICICI bank witnessed a contradiction of 14.32% of Open Interest (OI) in the near month contract. Meanwhile DLF witnessed an addition of 0.74% of OI in the August month futures. Also, Reliance Industries witnessed an decline of 2.28% of Open Interest (OI) in the August month contract.