Nifty hits lowest level in almost three weeks ahead of RBI meet

Nifty hit its lowest level in almost three weeks and closed near the intermediate support of 5,825 on Monday as traders chose to take some profits off the table ahead of the Reserve Bank of India's policy review meet tomorrow. Index has been under pressure for the past four sessions on worries that the RBI may hike interest rates to support the rupee from depreciating against the US dollar. The Reserve Bank of India might highlight risks from a fragile external sector and dwell upon a high current account deficit and imported inflation due to a weak rupee in its meeting tomorrow. Trading was also on a cautious note ahead of the Federal Reserve, the European Central Bank and the Bank of England will meet later this week. Sentiments in the early noon deals got a fillip from Finance Minister P. Chidambaram’s comments, who while addressing media, stated that he does not expect RBI’s recent liquidity steps to lead to increase in bank lending rates, notably a day ahead of RBI’s monetary policy review.

The rupee was trading weak in late trades due to month-end dollar demand from importers. The rupee was trading at Rs 59.30 compared with previous close of Rs 59.04 against the dollar.  Last week the Reserve Bank of India (RBI) tightened the liquidity further in order to arrest the depreciating rupee. However, the impact of the moves was not very helpful in strengthening the rupee. 

On the global front, Asian shares ended mixed ahead of the policy meetings of the US and European central banks. While, European shares too echoing the similar trend were trading on a mixed note. Globally, all eyes are on the US Federal Reserve policy meeting this week, which traders hope will provide more clues about the state of the economy and the future of the central bank's huge stimulus program.

Pressurized by weak global cues, index made a negative start in Monday’s morning deals and weakened further to hit fresh intraday low in mid-morning trade. Intraday recovery witnessed in early afternoon trade proved short lived as Finance Minister P. Chidambaram’s comments, who while addressing media, stated that he does not expect RBI’s recent liquidity steps to lead to increase in bank lending rates, notably a day ahead of RBI’s monetary policy review. Further, soothing some jittery nerves, FM added that India is still the second fastest growing economy and expressed hope of achieving six per cent growth this fiscal. The index weakened again in afternoon trade as European markets traded on a mixed note. In last leg index extended losses to hit fresh intraday low.

Meanwhile, sectoral indices on the NSE made a negative closing. CNX Auto up 0.17% and CNX Infra up by 013% remained the only gainers in the trade. While, CNX FMCG down by 3.58%, CNX MNC down 2.45%, CNX Realty down 2.25%, CNX Metal down by 1.80% and CNX PSU Bank down by 1.78% were the top losers.

The India VIX witnessed an addition 8.76 % at 18.25 as compared to its previous close of 16.78 on Friday. The 50-share CNX Nifty lost 54.55 points or 0.93% to settle at 5,831.65.

Nifty August 2013 futures closed at 5877.35 on Monday at a premium of 45.70 points over spot closing of 5,831.65, while Nifty September 2013 futures ended at 5905.95 at a premium of 74.30 points over spot closing. Nifty August futures saw an addition of 0.12 million (mn) units taking the total outstanding open interest (OI) to 18.14 mn units. The near month August 2013 derivatives contract will expire on August 29, 2013.

From the most active contracts, JP Associates August 2013 futures last traded at a premium of 0.30 points at 40.15 compared with spot closing of 39.85. The number of contracts traded was 24,429.

IDFC August 2013 futures last traded at a premium of 1.60 points at 111.85 compared with spot closing of 110.25. The number of contracts traded was 11,764.

Yes Bank August 2013 futures were at a premium of 6.70 points at 366.70 compared with spot closing of 360.00. The number of contracts traded was 16,118. 

ICICI Bank August 2013 futures last traded at a premium of 7.90 points at 937.95 compared with spot closing of 930.05. The number of contracts traded was 11,112.

Reliance Industries August 2013 futures were at a premium of 5.95 points at 894.95 compared with spot closing of 889.00. The number of contracts traded was 11,785.  Among Nifty calls, 6,000 SP from the Aug month expiry was the most active call with an addition of 0.31 million open interest.

Among Nifty puts, 5,800 SP from the Aug month expiry was the most active put with an addition of 0.25 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (4.73 mn) and that for Puts was at 5,800 SP (4.72 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5869.83 -- Pivot Point 5847.82 -- Support-- 5809.63.

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 Federal Bank 6.00, Hind Zinc 3.00, Ultra Cemco 2.03, Bharat Forg 2.00 and Infosys 1.55.

Among most active underlying, Jaiprakash Associates witnessed an addition of 3.28 million of Open Interest in the Aug month futures contract followed by R Com which witnessed an addition of 0.38 million of Open Interest in the near month contract; Reliance Power witnessed contraction of 1.09 million in the Aug month futures. Also, BHEL witnessed contraction of 0.07 million in Open Interest in the Aug month contract and Tata Steel witnessed an addition of 0.61 million of Open Interest in the near month futures contract.