Nifty closed below 5,300 as Food Bill fuels deficit concerns

The passage of a food security bill, considered as a boon for the ruling Congress party turned out to be a nightmare for the Dalal street as nifty suffered heavy losses  and  closed below 5,300 on concerns that the passage of the bill will further weigh on country's bleak fiscal and current account deficit situation. Weakness in global stocks and rupee hitting record low against the dollar also marred sentiments.

Pressurized by weak global cues, nifty made a gap-down start in early morning trades following the weakness in Asian stocks after the United States signaled possible military action against the Syrian government over a suspected chemical weapons attack. Index continued their southward journey to hit fresh intraday low in late morning trade as rupee plunged to 65.93 a dollar on strong demand for the dollar from banks and importers. Obliteration prevailed in afternoon trade untill last leg of trades as a weak opening in European equity markets dampened investor sentiments. There seemed to be no respite from bear operators as persistent selling was observed across the board.

Sectoral indices on the NSE made a red close. CNX finance was down by 6.16%, Bank Nifty was down by 5.37%, CNX Infra was down by 4.73%, CNX Realty was down by 4.28%  and CNX PSE was down by 4.18% remained the top loser in the trade. While, CNX IT was up by 0.22% was only the gainer in the trade.

The India VIX witnessed an addition of 11.52% at 29.42 as compared to its previous close of 26.38 on Monday. The 50-share CNX Nifty lost 189.05 points or 3.45% to settle at 5,287.45.

Nifty August 2013 futures closed at 5284.80 on Tuesday at a discount of 2.65 points over spot closing of 5,287.45, while Nifty September 2013 futures ended at 5302.35 at a premium of 14.90 points over spot closing. Nifty August futures saw contraction of 1.44 million (mn) units taking the total outstanding open interest (OI) to 19.92 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 discount of 0.05 points at 32.55 compared with spot closing of 32.60. The number of contracts traded was 21,805.

DLF August 2013 futures last traded at a premium of 0.75 points at 130.50 compared with spot closing of 129.75. The number of contracts traded was 32,089.

Tata Steel August 2013 futures last traded at a discount of 1.05 points at 271.65 compared with spot closing of 272.70. The number of contracts traded was 21,780.

HDFC Bank August 2013 futures were at a discount of 2.60 points at 563.20 compared with spot closing of 565.80. The number of contracts traded was 26,116. 

Yes Bank August 2013 futures were at a premium of 2.35 points at 236.35 compared with spot closing of 234.00. The number of contracts traded was 36,253. 

Among Nifty calls, 5,500 SP from the Aug month expiry was the most active call with contraction of 0.01 million open interest.

Among Nifty puts, 5,300 SP from the Aug month expiry was the most active put with contraction  of 0.07 million open interest.

The maximum OI outstanding for Calls was at 5,500 SP (6.81 mn) and that for Puts was at 5,300 SP (7.79 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5385.15 -- Pivot Point 5329.7 -- Support - 5232.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.75 for August month contract.

The top five scrips with highest PCR on OI were Bharat Forg 2.39, MRF 1.50, Infosys 1.47, Wipro 1.42, and Power Grid 1.33.

Among most active underlying, SBI witnessed   contraction of 1.26 million of Open Interest in the Aug month futures contract followed by ICICI Bank which witnessed contraction of 1.14 million of Open Interest in the near month contract; United Spirits witnessed  contraction of 0.66 million in the Aug month futures. Also, Reliance Industries witnessed contraction of 0.26 million in Open Interest in the Aug month contract and DLF witnessed  contraction of 9.46 million of Open Interest in the near month futures contract.