Weak global cues rattle market; Nifty breaches 5,000 mark

The fifty stock index -- Nifty -- witnessed bloodbath in Thursday’s trade and ended the nightmarish session with a cut of over four percent on the back of Fed’s gloomy outlook on the US economy, while a sharp fall in rupee too dampened the sentiments. Moreover, global cues remained subdued as Federal Reserve disappointed investors by saying there was a significant downside risks to US economy while, dread selloff witnessed in all the Asian counterparts as Chinese preliminary Manufacturing Purchasing Managers’ index (PMI), fell to a two-month low in September, indicating a broadening slowdown in the Chinese economy. Earlier, the Indian equity market made a gap down start on the back of weak cues from global equity indices. Moreover, continued selling by foreign funds and retail investors too dampened the sentiments. Meanwhile, metal and mining shares like Sterlite Industries, Sail, JSW Steel, Welspun Corp, Hindalco Industries, Tata Steel, Sesa Goa all ended the trade with a cut of 3-7 percent on weak economic data in China, the world’s largest consumer of aluminum and copper. In the late morning session, the local index extended its downfall, in wake of the negative cues worldwide, while weak opening in European counterparts too added nervousness in the market and the index breached its crucial 5,000 mark in noon trade. In the final hour of trade, market witnessed a second sharp wave of selling pressure which dragged the index near its crucial support  mark of 4,900 but, somehow market survive from breaching that level and finally, Nifty ended the sluggish day of trade with a cut of over 200 points.

On the global front, the US markets suffered sharp sell-off overnight after Fed said it will sell $400 billion worth of short-term securities to buy longer-term securities, in a move that could ultimately reduce rates on mortgages and other consumer and business loans while, all the Asian equity indices butchered during the trade and ended the session on subdued note on Thursday. Moreover, most of the European counterparts were trading in the red where, major indices like DAX, CAC and FTSE all were witnessing cut of over four percent at this point of time. Back home, all the sectoral indices on the NSE settled in the negative territory with CNX Realty losing the most, ending with a cut of over six percent followed by CNX Infra down by 4.52% and CNX Energy down by 4.25%. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, zoomed 22.44% and reached 33.88, while S&P Nifty dropped by 209.60 points or 4.08% to close at 4,923.65.

The India VIX gained by 22.44% at 33.88 as compared to its previous close of 27.67 on Wednesday.

The 50-share S&P CNX Nifty lost 209.60 points or 4.08% and settled at 4,923.65.

Nifty September 2011 futures closed at 4,908.35 at a discount of 15.30 points over spot closing of 4,923.65, while Nifty October 2011 futures were at 4,925.05 at a premium of 1.40 points over spot closing. The near month September 2011 derivatives contract expires on Thursday, September 29, 2011. Nifty September futures saw addition of 21.17% or 4.60 million (mn) units, taking the total outstanding open interest (OI) to 26.38 mn units.

From the most active contract by contract value, SBI’s September 2011 futures were at a premium of 0.95 point at 1933.00 compared with spot closing of 1932.05. The number of contracts traded was 33,848.

RIL September 2011 futures were at a discount of 0.25 point at 780.00 compared with spot closing of 780.25. The number of contracts traded was 39,989.

L&T September 2011 futures were at a discount of 0.80 point at 1482.90 compared with spot closing of 1483.70. The number of contracts traded was 15,447.

ICICI Bank September 2011 futures were at a discount of 0.15 point at 858.35 compared with spot closing of 858.50. The number of contracts traded was 22,281.

Infosys September 2011 futures were at a discount of 1.00 point at 2349.00 compared with spot closing of 2350.00. The number of contracts traded was 14,937.

Among Nifty calls, 5100 SP from the September month expiry was the most active call with a decline of 1.20 million or 27.47%.

Among Nifty puts, 5000 SP from the September month expiry was the most active put with addition of 2.34 million or 25.19%.

The maximum Call OI outstanding for Calls was at 5100 SP (5.59mn) and that for Puts was at 5000 SP (6.97 mn).

The respective Support and Resistance levels are: Resistance 5019.75-- Pivot Point 4963.75-- Support 4867.65.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.44 for September-month contract.

The top five scrips with highest PCR on OI were United Phosphorus 6.00, United Spirits 4.00, Patni Computer Systems 3.00, Siemens 2.33 and Kotak Bank 2.11.

Among most active underlying, RIL witnessed an addition of 12.47% of Open Interest (OI) in the September month futures contract followed by SBI witnessed an addition of 10.12% of Open Interest (OI) in the near month contract. Meanwhile Tata Steel witnessed an addition of 10.82% of OI respectively in the September month futures.  Finally, ICICI Bank witnessed an addition of 13.43% of Open Interest (OI) in the September month contract.