Nifty continues being butchered session after session

Nifty continued to witness bloodbath session after session and the benchmark snapped its day’s trade below the crucial 4,850 mark with a cut of about 100 points after investors sold off their positions on rising concerns of the US economy slipping into double-dip recession, while financial crisis in Europe and slowdown in domestic economy too dampened the sentiments. Earlier, the index made a gap down start and breached its crucial 4,850 mark in initial trade on the back of weak cues from global equity indices as rising fears of another recession hammered the investors’ sentiment. But, the index regained its psychological level on the back of short covering in blue chip stocks. However, in the late morning trade, the local index resumed its southward journey on report that strong earthquake with a preliminary magnitude of 6.8 hit northeastern Japan off Fukushima prefecture and a 50 cm tsunami advisory was issued for the coast of Miyagi and Fukushima. Moreover, subdued opening in European counterparts too dampened the sentiments. Afterwards, market traded in the tight range till mid noon as PSU oil marketing companies provided some relief as BPCL, HPCL and IOC edged higher in the trade as crude prices plummeted on fear of US sliding to recession. But, the index saw a steep fall of about 50 points in late trade and breached its crucial 4,800 mark as panic button were pressed on the IT space which led the losses for the second consecutive day on jitters that clients overseas may become cautious and cut their IT budgets. The CNX IT index slipped 4.38 percent, front-line IT companies like Infosys plunged 8%, Patni Computers, Wipro and TCS all ended with a huge cut while, Capital Goods stocks too were hit badly on concerns that major reforms may get stalled as the government was not able to handle the corruption and there may be an impasse in the monsoon session of parliament. L&T, Areva T&D and BHEL plunged by 4-5 percent. But, the benchmark recovered from its intra-day lows and regained its crucial 5,800 mark thanks to lower level buying in fundamentally strong bets and finally, Nifty ended the dismal day of trade a tad below its crucial 4,850 mark with a cut of about two percentage point.

On the global front, The US markets suffered sharp drop on Thursday and the major indices lost 4-5 percent for the day on getting bleak economic reports while, all the Asian counterparts shut shop in the red on last trading day of the week as renewed concerns the global economy will trip back into recession, gripped investors. Moreover, all the European counterparts were bleeding badly and the major indices like CAC, DAX and FTSE were trading with a cut of 2.50-3.50 percent at this point of time. Back home, Most of 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 about four and a half percent followed by CNX Infra down by 2.41% and CNX Services down by 2.18% while, CNX Realty up by 0.63% remained the lone gainer on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 6.33% and reached 29.19, while S&P Nifty declined by 98.50 points or 1.99% to close at 4,845.65.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 6.33% and reached 29.19, while S&P Nifty losing 98.50 points or 1.99%  settled at 4845.65.

Nifty August 2011 futures closed at 4,850.00, at a premium of 4.35 points over spot closing of 4,845.65, while Nifty September 2011 futures were at 4,858.85 at a premium of 13.20 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 12.41% or 2.86 million (mn) units, taking the total outstanding open interest (OI) to 25.96 mn units.

From the most active contract by contract value, SBI’s August 2011 futures closed at a premium of 5.70 point at 2039.55 compared with spot closing of 2033.85. The number of contracts traded was 35,564.

Infosys August 2011 futures were at a premium of 3.80 point at 2228.80 compared with spot closing of 2225.00. The number of contracts traded was 23,700.

L&T August 2011 futures were at a premium of 0.45 point at 1547.35 compared with spot closing of 1546.90. The number of contracts traded was 15,644.

ICICI Bank August 2011 futures were at a premium of 2.55 point at 840.55 compared with spot closing of 838.00. The number of contracts traded was 26,666.

Tata Steel August 2011 futures were at a premium of 0.75 point at 459.75 compared with spot closing of 459.00. The number of contracts traded was 23,677.

Among Nifty calls, 4900 SP from the August month expiry was the most active call with addition of 2.13 million or 91.57%.

Among Nifty puts, 4800 SP from the August month expiry was the most active put with contraction of 0.16 million or 2.90%.

The maximum Call OI outstanding for Calls was at 5100 SP (4.45 mn) and that for Puts was at 5000 SP (5.72 mn).

The respective Support and Resistance levels are: Resistance 4894.13-- Pivot Point 4845.11-- Support 4796.63.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.81 for August-month contract.

The top five scrips with highest PCR on OI were Bombay Dyeing 12.50, Bombay Rayon Fashions 10.50, Zee Entertainment Enterprises 4.40, Hotel Leela Venture 2.80 and Max India 2.00.

Among most active underlying, SBI witnessed an addition of 2.51% of Open Interest (OI) in the August month futures contract followed by Infosys bank witnessed an expansion of 17.32% of Open Interest (OI) in the near month contract. Meanwhile Tata Steel witnessed a contraction of 6.34% of OI in the August month futures. Lastly, Reliance Industries witnessed a decline of 0.17% of Open Interest (OI) in the August month contract.