Nifty ends lower amid political uncertainty

CNX Nifty extended losses for the third straight day on Tuesday and ended below its crucial 5,800 level amid political uncertainty after the DMK withdrew support to the ruling United Progressive Alliance and the hawkish statement of the Reserve Bank of India (RBI) that the headroom for further monetary easing remains quite limited. On the global front, Asian pacific shares rebounded on Tuesday, as concerns over the revival of the Euro-zone’s debt crisis receded. Meanwhile, European counterparts made a soft start weighed down by investors’ worries about the uncertainty over a bailout for Cyprus.

Back home, Nifty made a positive start after previous session’s steep fall. In the morning session, market traded in green near the neutral line as global cues remained supportive as all the Asian counters rallied on Tuesday’s morning trade. However, in the noon session, market slipped into red after DMK decided to snap ties with the ruling UPA government, over the Sri Lankan issue. Meanwhile, the RBI cut its key lending rate at the monetary policy review by 25 basis points, which also failed to boost market sentiments. The central bank kept cash reserve ratio, the portion of deposits banks need to park with RBI, unchanged at 4%. The hawkish commentary of RBI on further rate cuts led to sell-off in rate sensitive counters. Market continued its weak trade till the end of session on the back of selling witnessed in all major indices. Finally, Nifty ended the session with a loss of massive 89 points.

Meanwhile, all of the sectoral indices on the NSE made a negative closing. CNX Realty down 3.65%, CNX PSU Bank down 2.70%, CNX Infra down 2.69%, CNX Metal down 2.57% and CNX Finance down 2.22% remained the top losers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, up by 5.43% and reached 16.71.

The India VIX witnessed an addition of 5.43% at 16.71 as compared to its previous close of at 15.85 on Monday.

The 50-share CNX Nifty lost 89.30 points or 1.53% to settle at 5,745.95.

Nifty March 2013 futures closed at 5,751.90 on Tuesday at a premium of 5.95 points over spot closing of 5,745.95, while Nifty April 2013 futures ended at 5,787.40, at a premium of 41.45 points over spot closing. Nifty March futures saw an addition of 0.73 million (mn) units taking the total outstanding open interest (OI) to 16.00 mn units. The near month March 2013 derivatives contract will expire on March 28, 2013.

From the most active contracts, BHEL March 2013 futures were trading at a premium of 0.50 points at 186.35 compared with spot closing of 185.85. The number of contracts traded was 12,382.

Tata Motors March 2013 futures were trading at a discount of 0.70 points at 282.80 compared with spot closing of 283.50. The number of contracts traded was 13,501.

DLF March 2013 futures were trading at a premium of 1.40 points at 260.40 compared with spot closing of 259.00. The number of contracts traded was 24,494.

ICICI Bank March 2013 futures were at a premium of 4.75 points at 1034.75 compared with spot closing of 1030.00. The number of contracts traded was 30,551.

Reliance Industries March 2013 futures were at a premium of 0.95 points at 826.00 compared with spot closing of 825.05. The number of contracts traded was 15,904.

Among Nifty calls, 6,000 SP from the March month expiry was the most active call with an addition of 1.39 million open interest.

Among Nifty puts, 5,700 SP from the March month expiry was the most active put with contraction of 2.28 million open interest.

The maximum OI outstanding for Calls was at 6000 SP (9.98 mn) and that for Puts was at 5,700 SP (8.52 mn).

The respective Support and Resistance levels are: Resistance 5831.6-- Pivot Point 5777.95-- Support 5692.3.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.99 for March -month contract.

The top five scrips with highest PCR on OI were Divis Lab 2.50, HDFC Bank 2.00, Asian Paints 1.62, TCS 1.61 and Sun Pharma 1.60. 

Among most active underlying, Unitech witnessed contraction of 1.20 million of Open Interest in the March month futures contract followed by JP Associates which witnessed contraction of1.35 million of Open Interest in the near month contract. Meanwhile, IFCI witnessed of contraction of 1.19 million in the March month futures. Also, RCOM witnessed contraction of 0.58 million in Open Interest in the March month contract. Finally, Hindalco witnessed a contraction of 1.72 million of Open Interest in the near month futures contract.