Nifty ends below 5900 on poor results

Nifty extended losses for the third straight session and closed below 5,900 on looming fears of a slowdown in China coupled with caution ahead of Reserve Bank of India and US Federal Reserve’s policy meeting next week. The Reserve Bank of India’s monetary policy on Tuesday will be a key trigger for the index due to its effect on the liquidity. The central bank, earlier, this week, tightened liquidity by capping the daily Liquidity Adjustment Facility borrowing to half a per cent of each bank’s deposits. Besides, it said banks must keep a daily Cash Reserve Ratio balance of 99 per cent of the requirement. Meanwhile US Federal Reserve will unveil its policy decision on Wednesday with investors awaiting clarity on tapering of the stimulus.

Sentiments turned upbeat after the Prime Minister’s Office (PMO), with an aim of fast-tracking infrastructure development, set deadlines for steps to implement key projects covering sectors like railways, highways and power. Market sentiments also improved following comments from Chief Economic Adviser Raghuram Rajan, that all options were being considered to fund the country's record-high current account deficit and policy measures were geared to stabilize a weak rupee in a way that only does minimal damage to growth.

The RBI's measures seem to be gaining success after a muted initial response, as the rupee rose to a five-week high of 58.69 on Friday, moving further away from its record low of 61.21 hit earlier this month. Benchmark 10-year bond yields fell 3 basis points to 8.16%, although they are still up 61 basis points since the RBI unveiled its first round of measures. However, the up-side remained capped after Crisil, the global rating agency revised GDP growth forecast for India downwards to 5.5 percent this fiscal from its earlier estimate of 6 percent, citing reduced likelihood of monetary easing going forward due to falling rupee. Meanwhile, rate sensitives remained under pressure on worries that the central bank may hike interest rates to support the rupee from depreciation. Sentiments also got dampened after Foreign institutional investors sold Rs 4.42 billion worth of local shares on Thursday, exchange data shows. This is the second consecutive day of selling by overseas investors.

Selling got intensified as European markets, after a positive start, took U-turn to enter into red terrain in early deals, as investors remained on sidelines ahead of Fed and the European Central Bank meeting next week, along with some significant political events in Europe. Asian markets too shut shop mostly in the red with Japanese Nikkei declining to its two-week low, down by about three percent, as selling accelerated on the back of a firmer yen and disappointing quarterly earnings from the likes of Canon Inc and Advantest Corp. Meanwhile, strengthening Yen also weighed on exporter shares

Nifty opened on a positive note and a bout of volatility was witnessed in early trade. Sentiments remaining upbeat after the Prime Minister’s Office (PMO), with an aim of fast-tracking infrastructure development, set deadlines for steps to implement key projects covering sectors like railways, highways and power. The index trimmed losses after hitting fresh intraday low in early afternoon trade. In last leg indices hit their fresh intraday lows in afternoon trade on selling in HUL and Tata Motors shares, amid nervousness in rate-sensitive sectors ahead of the RBI credit policy review next week.

Meanwhile, sectoral indices on the NSE made a negative closing. CNX Pharma up 0.40% and CNX FMCG up by 0.31% remained the only gainers in the trade. While, CNX Metal down by 3.24%, CNX PSU Bank down 3.02%, CNX Media down 2.66%, CNX MNC down by 1.63% and Bank Nifty down by 1.40% were the top losers.

The India VIX witnessed an addition 0.36% at 16.78 as compared to its previous close of 16.72 on Thursday. The 50-share CNX Nifty lost 21.30   points or 0.36% to settle at 5,886.20.

Nifty August 2013 futures closed at 5925.25 on Friday at a premium of 39.05 points over spot closing of 5,886.20, while Nifty September 2013 futures ended at 5956.50 at a premium of 70.30 points over spot closing. Nifty August futures saw marginal addition of 9,850 units taking the total outstanding open interest (OI) to 18.01 mn units. The near month August 2013 derivatives contract will expire on August 29, 2013.

From the most active contracts, ITC August 2013 futures last traded at a premium of 3.30 points at 372.10 compared with spot closing of 368.80. The number of contracts traded was 17,706.

DLF August 2013 futures last traded at a discount of 1.15 points at 171.10 compared with spot closing of 172.25. The number of contracts traded was 14,294.

Yes Bank August 2013 futures were at a premium of 2.15 points at 369.65 compared with spot closing of 367.50. The number of contracts traded was 41,254. 

ICICI Bank August 2013 futures last traded at a premium of 4.50 points at 938.50 compared with spot closing of 934.00. The number of contracts traded was 17,506.

Reliance Industries August 2013 futures were at a premium of 9.00 points at 899.00 compared with spot closing of 890.00. The number of contracts traded was 14,392. 

Among Nifty calls, 6,000 SP from the Aug month expiry was the most active call with an addition of 1.15 million open interest.

Among Nifty puts, 5,800 SP from the Aug month expiry was the most active put with an addition of 0.84 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (4.41 mn) and that for Puts was at 5,800 SP (4.47 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5930.63 -- Pivot Point 5900.07 -- Support-- 5855.63.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.13 for Aug-month contract. The top five scrips with highest PCR on OI were Tata Chemical 5.00, Bharat Forg 3.00, Hind Zinc 3.00, HUL 1.47 and Infosys 1.47.

Among most active underlying, Jaiprakash Associates witnessed an addition of 0.46 million of Open Interest in the Aug month futures contract followed by R Com which witnessed an addition of 0.13 million of Open Interest in the near month contract; Reliance Power witnessed an addition of 0.02 million in the Aug month futures. Also, BHEL witnessed contraction of 0.30 million in Open Interest in the Aug month contract and Reliance Sterlite Industries  witnessed an addition of 1.18 million of Open Interest in the near month futures contract.