December series F&O ends on disappointing note; Nifty ends below 5,900 mark

December series futures and options expiry turned out to be an extremely disappointing affair for the Indian stock markets as the benchmarks capitulated to the unrelenting selling pressure amid extremely high volatility. The hefty sell-off witnessed in last leg of trade dragged the key indices below the psychological 5,900 (Nifty) and 19,350 (Sensex) levels. Investors resorted to ruthless position squaring from the Oil & Gas, Software, metal and technology counters in the last half an hour, ahead of the F&O series expiry. The final day of the 2012’s last F&O series saw Indian benchmark indices collapsing by over a half a percent as investors rolled over their portfolios for the fresh January series coupled with looming uncertainty over a US fiscal-cliff resolution.

Moreover, risk appetite remained frail on fear that US may slip into recession as US fiscal-cliff talks stalled. However, most of the Asian equity indices ended the session in the green amid optimism that a new government in Japan will fuel the country’s sluggish economy. European counters traded slightly in the positive in early deals as US lawmakers prepared to resume negotiations to avoid a fiscal crunch, while the yen hit a 21-month low on the prospect of drastic monetary easing.

Back home, market made a sedate start with positive bias after government announced sops for exporters. Further, hopes of more steps from the RBI to ease the liquidity situation also influenced the trading sentiments. However, the sentiments turned cautious on report that Planning Commission is likely to seek the National Development Council’s nod to lower the average annual growth rate for the 12th Plan period to 8 per cent from 8.2 per cent to make it more realistic.

Some amount of selling pressure also came in from software pack as investors shrugged off IT stock on the last day of December derivatives expiry as concerns over companies’ profitability in the coming quarters weighted on sentiments. FMCG pack too declined by over half a percent on the back of profit booking after two days rally in previous sessions. However, the losses remain capped up to certain limit as auto stocks surged ahead of auto companies unveiling sales data for December 2012 from January 1, 2013. Oil exploration stocks like ONGC and Oil India edged higher as US crude oil futures traded near the highest level in 2 months as US lawmakers prepared to resume budget talks to meet a year-end deadline. Meanwhile, shares of PC Jeweller rose about 15 percent in its stock market debut after the company raised Rs 610 crore in an initial public offering as investors bet on strong demand for jewellery sales.

On the F&O front, Nifty and Sensex, for December series, registered gains of 0.7% each, as against 2.10% profit in November series. Moreover, in the broader markets, CNX Mid Cap index garnering gains of over 4.7% not only outperformed frontline equity indices, but also BSE Smallcap index, which ended with gains of over 1%. From the expiry perspective, market wide rollover of 61.42% was observed, which was higher than the three month average of 61.03% while Nifty rollovers were at 56.94%, higher than three month average of 53.14%. Sectorally, Telecom, cement and capital goods space witnessed high rollover of positions while infrastructure, technology and automobile stocks observed relatively low rolls into the December series. Among individual stocks, HDFC (32%), ACC (43%) and Dr Reddy’s (45%) are witnessing low rolls while BHEL (80%), Maruti (73%) and Power Grid (70%) are observing better rollover into the January series.

The NSE’s 50-share broadly followed index Nifty declined by thirty five points to end below its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over ninety points to finish below the psychological 19,350 mark. Moreover, broader markets too butchered badly ending the session with a cut of over half a percent.

The overall volumes stood above Rs 4.14 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of declines as there were 1,227 shares on the gaining side against 1,668 shares on the losing side while 131 shares remain unchanged.

Finally, the BSE Sensex lost 93.66 points or 0.48% to settle at 19,323.80, while the S&P CNX Nifty declined by 35.50 points or 0.60% to end at 5,870.10.

The BSE Sensex touched a high and a low of 19,504.40 and 19,302.21, respectively. The BSE Mid-cap index was down by 0.45% and Small-cap index was down by 0.73%.

The top gainers on the Sensex were, Tata Motors up 1.34%, ONGC up 0.86%, SBI up 0.74%, Dr Reddys Lab up 0.59% and Bharti Airtel up 0.38%, while, BHEL down by 1.74%, Jindal Steel down by 1.68%, Sterlite Industries down by 1.59%, GAIL down by 1.57% and Mahindra & Mahindra down by 1.47% were the top losers on the index.

There was no gainer on the BSE Sectoral space, while IT down 0.77%, Oil & Gas down 0.69%, Metal down 0.65%, TECk down 0.65% and Consumer Durables down 0.63% were the top losers on the sectoral space.

Meanwhile, to discuss the modalities on how Reliance Power should utilize surplus coal from the blocks allocated for Sasan Ultra Mega Power Project (UMPP), for another project in Chitrangi, the Power and Coal ministries are expected to meet on December 27. The meeting would be related to the coal blocks of 3,960 MW Sasan UMPP in Madhya Pradesh, is likely to be taken by I C P Kesari, joint secretary at the Power Ministry, who looks after Ultra Mega Power Projects.

The meeting is likely to discuss on a suitable mechanism to ensure that conditions stipulated by the Empowered Group of Ministers (EGoM) regarding surplus coal of Sasan UMPP are not violated by the developer. Earlier in April this year, an EGoM chaired by the then Finance Minister Pranab Mukherjee decided not to review the earlier decision allowing Reliance Power to use excess coal from the Sasan UMPP mines for the Chitrangi project, also located in Madhya Pradesh.

Reliance Power bagged the 3,960 MW Sasan UMPP in 2007 through competitive bidding. The company was allotted Moher, Moher-Almohri and Chhatrasal captive coal mines for developing the project. At the peak, these blocks' can produce up to 25 million tonnes of coal per annum. Moher, Moher-Almohri can produce 20 million tonnes, while Chhatrasal can produce 5 million tonnes.

The S&P CNX Nifty touched a high and a low of 5,930.80 and 5,864.70 respectively.

The top gainers on the Nifty were Bank of Baroda was up 1.20%, Tata Motors up 1.05%, SBI up 0.81%, ONGC up 0.74% and Dr Reddy up 0.71%.

The top losers on the index were GAIL down by 1.95%, Jindal Steel down by 1.86%, BHEL down by 1.65%, JP Associates down by 1.43% and PowerGrid down by 1.43%.

The European markets were trading mixed, France’s CAC 40 up by 0.20% and the United Kingdom’s FTSE 100 up by 0.21%. On the other hand Germany’s DAX down by 0.21%.

Asian Markets ended mostly higher on Thursday after U.S. lawmakers are all set to resume negotiations to avoid a fiscal crunch by December 31. Meanwhile, Japan’s Nikkei touched highest level in more than a year on the back of optimism that a new government in Japan will fuel the country’s sluggish economy. Moreover, dollar rose to its highest level against the yen as Japan’s Prime Minister Shinzo Abe took office, raising expectations that the Bank of Japan will initiate more aggressive monetary easing under his leadership. However, Mainland Chinese shares went home with a red mark, amid a lack of cues from policymakers. Hang Seng closed marginally higher and buying gained pace as the market reopened after two days holiday.