Nifty sinks to 11-month low as rupee weakens

Nifty erased initial gains and sank to its 11-month low as the rupee plunged against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to strengthen the US economy. Weakness in European stocks also dampened sentiments. The rupee slipped to a fresh record low of 64.54 against the US dollar despite strong measures adopted by the RBI. The partially convertible rupee closed at 64.12, against its previous close of 63.25. The slide was triggered by sustained dollar demand from banks and importers on the back of a strengthening US currency overseas.

Snapping the three-day fall, Nifty made a gap-up start recapturing its crucial 5,450 bastion in early morning deals after the central bank announced steps to support the beaten-down bond market and to prop up the battered rupee. A bout of volatility was witnessed and the index pared initial gains to hit fresh intraday low. Sentiments turned pessimistic afternoon deals as the Index pared all its early gains and entering into the negative terrain after the local currency slumped, trading around 64.43 against the dollar at the time of closing of equity markets.

Sectoral indices on the NSE made a red close. CNX Realty was down by 3.89% , CNX Energy  was down by 3.59%, CNX FMCG was down by 3.26%,CNX Infra was down by 3.14%, and CNX Commodities was down by 3.12% remained the top loser in the trade. While, CNX Finance was up by 0.85% and Bank Nifty was up by 0.49% remained the top gainers in the trade.

The India VIX witnessed an addition of 3.15% at 28.09 as compared to its previous close of 27.23 on Tuesday. The 50-share CNX Nifty lost 28.09 points or 1.83% to settle at 5,302.55.

Nifty August 2013 futures closed at 5291.60 on Wednesday at a discount of 10.95 points over spot closing of 5,302.55, while Nifty September 2013 futures ended at 5326.80 at a premium of 24.25 points over spot closing. Nifty August futures saw an addition of 3.44 million (mn) units taking the total outstanding open interest (OI) to 24.23 mn units. The near month August 2013 derivatives contract will expire on August 29, 2013.

From the most active contracts, DLF August 2013 futures last traded at a discount of 0.10 points at 148.75 compared with spot closing of 148.85. The number of contracts traded was 31,257.

Tata Steel August 2013 futures last traded at a discount of 0.20 points at 248.10 compared with spot closing of 248.30. The number of contracts traded was 25,069.

Yes Bank August 2013 futures were at a discount of 2.50 points at 255.50 compared with spot closing of 258.00. The number of contracts traded was 80,398. 

HDFC Bank August 2013 futures last traded at a discount of 3.10 points at 592.90 compared with spot closing of 596.00. The number of contracts traded was 22,180.

Reliance Industries August 2013 futures were at a discount of 2.85 points at 782.90 compared with spot closing of 785.75. The number of contracts traded was 29,344.  Among Nifty calls, 5,700 SP from the Aug month expiry was the most active call with contraction of 0.68 million open interest.

Among Nifty puts, 5,300 SP from the Aug month expiry was the most active put with contraction of 1.01million open interest.

The maximum OI outstanding for Calls was at 5,700 SP (6.81 mn) and that for Puts was at 5,300 SP (6.69 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5448.28 -- Pivot Point 5358.37 -- Support - 5212.63.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.25 for August month contract.

The top five scrips with highest PCR on OI were Bharat Forg 2.43, Ultra Cemco 2.21, SR Transfin 1.63, Wipro 1.40 and Power Grid 1.29.

Among most active underlying, SBI witnessed  contraction of 0.17 million of Open Interest in the Aug month futures contract followed by MC Dowell-N which witnessed contraction of 0.28 million of Open Interest in the near month contract; Reliance Industries witnessed  an addition of 0.38 million in the Aug month futures. Also, ICICI Bank witnessed an addition of 0.49 million in Open Interest in the Aug month contract and DLF witnessed contraction of 1.80 million of Open Interest in the near month futures contract.