Nifty snaps five days gaining streak

S&P CNX Nifty snapped its five days winning streak on Friday despite the government going on an overdrive on reforms, as couple of trading errors on Nifty pressed the panic button momentarily, resulting sharp fluctuations in the key stock indices. The market circuit filter got triggered due to entry of 59 erroneous orders which resulted in multiple trades for an aggregate value of over Rs 650 crore. These orders have been entered by a trading member Emkay Global Financial Services on behalf of an institutional client. However, market made some recovery afterwards supported by firm global cues. Asian markets snapped the day’s trade in the green as investors geared up to take risk after a report showed the number of Americans filing new claims for unemployment benefits rose less than expected last week and the European Central Bank said it was ready to buy bonds of troubled euro zone countries. While, European counters too were trading with traction ahead of the closely watched US nonfarm payrolls report.

Back home, the undertone turned cautious immediately after a firm opening, as the markets seemed to have already reacted to the news of impending Cabinet nod for FDI in pension sector and increase in FDI limit in insurance. Meanwhile, the index suddenly dropped by over 900 points to a session low of 4,888.20, a drop of 15.5 per cent below Thursday’s closing level. A single dealer terminal at Emkay placed 59 erroneous orders for an institutional client, resulting in trade worth over Rs 650 crore. Afterwards, the spot trading was halted on the NSE for 15 minutes from 9.50 a.m. to 10.05 a.m. The market reopened by the exchange with a pre-open phase at 10.00.22 and trading resumed at 10.05.00. The market recovered most of its lost ground, supported by firm opening in European counters. Though the sentiments got some support after shares of companies engaged in education sector like Everonn Education and Educomp Solution traded jubilantly on back of heavy volumes. The Cabinet on October 4, 2012 approved the draft of the 12th Five-Year Plan, which seeks to increase funding for social sectors such as health and education besides boosting economic growth. Finally, Nifty which dipped to 4888 level on freak trade concluded above the 5700 crucial mark, to end with cut of over half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in the red, CNX Media remained the major loser, down 1.94% followed by CNX IT down 1.67% and CNX Pharma down by 1.52% while CNX Auto and CNX FMCG rose 0.54% and 0.53% remaining the top gainers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 2.07% and reached 16.78.

The India VIX witnessed an addition of 2.07% at 16.78 as compared to its previous close of at 16.44 on Thursday.

The 50-share S&P CNX Nifty lost 40.65 points or 0.70% to settle at 5,746.95.

Nifty October 2012 futures closed at 5776.55 on Friday at a premium of 29.60 points over spot closing of 5,746.95, while Nifty November 2012 futures were at 5807.50 at a premium of 60.55 points over spot closing. Nifty October futures saw an addition of 0.75 million (mn) units taking the total outstanding open interest (OI) to 26.40 mn units. The near month October 2012 derivatives contract will expire on October 25, 2012.

From the most active contracts, Tata Motors October 2012 futures were trading at a premium of 0.20 at 281.70 compared with spot closing of 281.50. The number of contracts traded was 25,172.

HDIL October 2012 futures were trading at a discount of 0.15 at 108.35 compared with spot closing of 108.50. The number of contracts traded was 18,649.

DLF October 2012 futures were at a premium of 0.70 point at 243.10 compared with spot closing of 242.40. The number of contracts traded was 17,830.

BHEL October 2012 futures were at a premium of 0.75 point at 264.05 compared with spot closing of 263.30. The number of contracts traded was 16,322.

HDFC October 2012 futures were at a premium of 7.35 point at 756.30 compared with spot closing of 748.95. The number of contracts traded was 40,120

Among Nifty calls, 6000 SP from the October month expiry was the most active call with an addition of 0.62 million open interest.

Among Nifty puts, 5500 SP from the October month expiry was the most active put with an addition of 0.54 million open interest.

The maximum OI outstanding for Calls was at 6000 SP (6.71 mn) and that for Puts was at 5600 SP (5.55 mn).

The respective Support and Resistance levels are: Resistance 6078.8 -- Pivot Point 5483.5 --Support 5151.65.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.11 for October - month contract.

The top five scrips with highest PCR on OI were ITC 1.56, Ambuja Cement 1.21, Union Bank 1.14, SBI 1.12 and PNB 1.08.

Among the most active underlying, IFCI, witnessed contraction of 0.06 million of Open Interest in the October month futures contract followed by JP Associates, which witnessed contraction  of 5.21 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed contraction of 1.53 million in the October month futures. Also, Unitech witnessed contraction of 3.41 million in Open Interest in the October month contract. Finally, HDIL witnessed an addition of 1.64 million of Open Interest in the near month futures contract.