Nifty slumps on weak rupee

Nifty ended lower for eighth straight trading session this Friday and closed below 5,700 on back of selling pressure witnessed in rate-sensitive shares as investors remained uncertain as to when the central bank will rollback its short-term rate hike aimed to curb rupee’s fall. Bank shares fell after the Reserve Bank of India Governor said on Friday the central bank would roll back recent cash tightening measures only after it determines stability has been restored in the foreign exchange market. The rupee fell on higher demand for the US currency from importers, even as RBI took more measures to curb the domestic unit's fall. The partially convertible currency was trading at 61.05 against US dollar compared to yesterday’s close of 60.43.

On the global front, while Asian shares advanced on Friday after brisk US factory activity data and a commitment to easy monetary policy by European central banks and the Federal Reserve buoyed Wall Street to record highs overnight, European markets too continued to trade upbeat. European shares extended gains to set a new two-month high on Friday, with investors betting that US jobs numbers will surprise on the positive side and signal a further pickup in economic activity in the country.

Index after a positive opening pared most of their gains triggered by the government's decision on Thursday, to relax foreign direct investment (FDI) rules in a number of sectors and continued to show volatile trend though in a narrow range with index swinging between negative and positive zone on account of profit booking in late morning trade. Index steadily went on losing ground after the rupee fell on higher demand for the US currency from importers, even as RBI took more measures to curb the domestic unit’s fall although some recovery came in the late hours of trade, but that remained insufficient to lift the markets in green. Much of the selling pressure was witnessed in the afternoon deals despite the positive start of European markets.

Meanwhile, sectoral indices on the NSE made red closing. CNX Realty Bank down 4.06%, CNX Metal down 3.64%, CNX Infra down 2.84%, CNX PSU Bank down 2.42% and CNX PSE down 2.18% remained the top losers in the trade. While, CNX IT up by 1.04% and CNX Media up by 0.50% remained the gainers in the trade.

The India VIX witnessed an addition 5.45% at 20.89 as compared to its previous close of 19.81 on Thursday. The 50-share CNX Nifty lost 49.95 points or 0.87% to settle at 5,677.90.

Nifty August 2013 futures closed at 5705.55 on Friday at a premium of 27.65 points over spot closing of 5,677.90, while Nifty September 2013 futures ended at 5732.45 at a premium of 54.55 points over spot closing. Nifty August futures saw contraction of 0.96 million (mn) units taking the total outstanding open interest (OI) to 15.44 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 0.45 points at 29.95 compared with spot closing of 29.50. The number of contracts traded was 21,084.

Reliance Communications August 2013 futures last traded at a discount of 0.90 points at 123.50 compared with spot closing of 124.40. The number of contracts traded was 18,067.

DLF August 2013 futures were at a premium of 0.35 points at 128.75 compared with spot closing of 128.40. The number of contracts traded was 29,155. 

Yes Bank August 2013 futures last traded at a premium of 6.05 points at 311.35 compared with spot closing of 305.30. The number of contracts traded was 20,998.

ICICI Bank August 2013 futures were at a premium of 7.00 points at 894.70 compared with spot closing of 887.70. The number of contracts traded was 17,363.  

Among Nifty calls, 6,000 SP from the Aug month expiry was the most active call with an addition of 0.64 million open interest.

Among Nifty puts, 5,700 SP from the Aug month expiry was the most active put with contraction of 0.23 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (6.95 mn) and that for Puts was at 5,700 SP (6.01 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5743.5 -- Pivot Point 5696.25 - Support -- 5630.65.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.03 for August month contract. The top five scrips with highest PCR on OI were Hind Zinc 2.67, Federal Bank 2.33, Bharat Forge 1.75, Infosys 1.26 and Grasim 1.21.

Among most active underlying, JP Associates witnessed an addition of 2.75 million of Open Interest in the Aug month futures contract followed by Unitech which witnessed contraction of 0.84 million of Open Interest in the near month contract; HDIL witnessed an addition  of 3.90 million in the Aug month futures. Also, Reliance Communications witnessed contraction of 0.30 million in Open Interest in the Aug month contract and DLF witnessed an addition of 1.84 million of Open Interest in the near month futures contract.