Subdued global cues and patchy corporate earnings drag Nifty below 5,700 mark

Pressurized by subdued global cues and patchy second quarter earnings from Indian corporate, S&P CNX Nifty ended the trade below its crucial 5,700 mark. On the global front, Asian equities shut shop in the red terrain as investors shunned risk on concerns over corporate earnings, with the region's exporters struggling against shrinking global demand. Moreover, European shares too were in red, weighed by a fresh batch of gloomy corporate outlooks with demand for everything from cars to building materials hit by the euro zone crisis. Back home, investors were also wary of taking position ahead of Cabinet reshuffle meet, scheduled to be held on October 28, 2012, with the lingering suspense over Congress General Secretary Rahul Gandhi joining the government.

Earlier, the Indian benchmark started the session in the red breaching crucial 5,700 mark as traders remained sideways from piling up positions in equities ahead of Reserve Bank of India (RBI) monetary policy slated to be announced on October 30, 2012. Moreover, disappointment from some companies’ second quarter earning too dampened the sentiments. PNB slumped over 6% after reporting a drop in net profit by 11.6% year-on-year to Rs 1,065 crore in the July-September quarter of current financial year 2012-13 due to jump in non-performing assets. Yet another miss belonged to banking space, as public sector lender Indian Overseas Bank’s (IOB) stocks too tanked 6% after the bank’s net profit fell by 23.7% year-on-year to Rs 158.4 crore in the second quarter of financial year 2012-13 due to increase in non-performing assets (NPAs). The frontline index also got clobbered following weakness in European counters. Selling got intensified in late trade and the index lost its psychological 5,650 mark as banking space lost about a percent on reports that the central bank is unlikely to ease key policy rates at its second quarter monetary policy review in wake high inflation. In last half an hour of trade, market regained its important 5,650 mark as some amount of support came in from Auto space, which gathered gain of about a percent on hopes that sales growth would pick up ahead of the festive season. Finally, the Nifty snapped the session with a cut of over half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in the negative territory with CNX Media losing the most, ending with a cut of 3.21% followed by CNX PSU Bank down by 2.19% and CNX FMCG down by 1.81% while, CNX Auto up 0.86% remained the lone gainer on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 5.10% and reached 14.21.

The India VIX witnessed an addition of 5.10% at 14.21 as compared to its previous close of at 13.52 on Thursday.

The 50-share S&P CNX Nifty lost 41.00 points or 0.72% to settle at 5,664.30.

Nifty November 2012 futures closed at 5699.30 on Friday at a premium of 35.00 points over spot closing of 5,664.30, while Nifty December 2012 futures were at 5729.50 at a premium of 65.20 points over spot closing. Nifty November futures saw contraction of 0.07 million (mn) units taking the total outstanding open interest (OI) to 17.98 mn units. The near month November 2012 derivatives contract will expire on November 29, 2012.

From the most active contracts, JP Associates November 2012 futures were trading at a discount of 0.75 at 89.40 compared with spot closing of 90.15. The number of contracts traded was 9,229.

DLF November 2012 futures were trading at a premium of 1.40 at 204.45 compared with spot closing of 203.05. The number of contracts traded was 8,487.

Reliance Industries November 2012 futures were at a premium of 5.50 point at 805.00 compared with spot closing of 799.50. The number of contracts traded was 12,607.

United Spirits November 2012 futures were at a premium of 13.10 point at 1214.40 compared with spot closing of 1201.30. The number of contracts traded was 16,374.

ICICI Bank November 2012 futures were at a premium of 10.60 point at 1088.10 compared with spot closing of 1077.50. The number of contracts traded was 42,157. 

Among Nifty calls, 5800 SP from the November month expiry was the most active call with an addition of 0.65 million open interest. 

Among Nifty puts, 5700 SP from the November month expiry was the most active put with an addition of 0.66 million open interest.

The maximum OI outstanding for Calls was at 5800 SP (3.43 mn) and that for Puts was at 5700 SP (3.59 mn).

The respective Support and Resistance levels are: Resistance 5693.75 -- Pivot Point 5667.75 -- Support 5638.30.

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

The top five scrips with highest PCR on OI were Tata Communications 6.00, Mphasis 2.00, Idea Cellular 1.95, Adani Ports 1.50 and Biocon 1.44.

Among most active underlying, Unitech witnessed an addition of 0.88 million of Open Interest in the November month futures contract followed by JP Associates which witnessed an addition of 0.15 million of Open Interest in the near month contract. Meanwhile, Reliance Communications witnessed an addition of 0.99 million in the November month futures. Also, Shree Renuka Sugar witnessed an addition of 2.64 million in Open Interest in the November month c ontract. Finally, Hindalco Industries witnessed contraction of 0.05 million of Open Interest in the near month futures contract.