Nifty surrenders 4,950 mark on European turmoil

Chaos of domestic market is not looking to end shortly as fifty stock index -- Nifty -- once again clobbered out of shape in the last leg of the trade and snapped the choppy session with loss of about two percent. However, market hovered near its neutral line till mid noon trade but, the index surrendered its crucial 4,950 mark in final hour of trade due to intense selling pressure on the back of depressing global developments. Moreover, all the sectoral indices ended in the red with energy, realty and PSE leading the fall.

Initially, sentiments remained bearish for the sixth straight session as funds and investors offloaded positions in knee-jerk response to India Inc’s lower-than-expected second quarter corporate earnings. Thereafter, market extended its crucial 5,000 mark as investors’ emotion remained under pressure on International credit rating agency Moody’s statement that India’s public debt at 70% of its GDP is preventing it from securing an investment-grade rating. But, market pared all of its losses in mid morning trade as food inflation eased further. Primary articles inflation for week ended November 5 has come in at 10.39% versus 11.43%, food articles inflation at 10.63% versus 11.81% while fuel group inflation is at 15.49% versus 14.5%. Moreover, recovery in banking stocks too supported the up-move. Afterwards, the Indian equities consolidated around neutral line in noon trades as cautious investors avoided taking any positions, even in the oversold stocks on concern of stagnating local and weakening global economy. But, it was the last leg of trade where massive selling was witnessed and market lost its control hitting fresh 5-week lows as European stocks declined. Finally, Nifty ended the trade with a cut of about 100 points near its intraday low breaching its crucial 4,950 level.

Globally, the US markets slumped on Wednesday, after Fitch Ratings signaled trouble for US banks if Europe’s debt trouble worsens while, Asian shares wobbled on Thursday as doubts deepened about Europe's ability to stop its sovereign debt crisis from spinning out of control, with Germany and France split over the European Central Bank's bond buying role. Moreover, all the European counterparts were bleeding badly at this point of time. Back home, all the sectoral indices on the NSE were hammered badly and settled in the negative territory with CNX Energy losing the most, ending with a cut of over three percent followed by CNX Realty down by 2.59% and CNX PSE down by 2.37% on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, zoomed 7.50% and reached 26.92.

The 50-share S&P CNX Nifty slid 95.70 points or 1.90% and settled at 4,934.75.

Nifty November 2011 futures closed at 4,925.30 at a discount of 9.45 points over spot closing of 4,934.75, while Nifty December 2011 futures were at 4,952.75 at a premium of 18.00 points over spot closing. The near month November 2011 derivatives contract expires on Thursday, November 24, 2011. Nifty November futures saw addition of 2.65 million (mn) units taking the total outstanding open interest (OI) to 27.71 mn units.

From the most active contract by contract value, SBI's November 2011 futures were at a discount of 2.00 point at 1748.00 compared with spot closing of 1750.00. The number of contracts traded was 38,080.

ICICI Bank November 2011 futures were at a premium of 0.45 point at 776.30 compared with spot closing of 775.85. The number of contracts traded was 30,034.

Tata Motors November 2011 futures were at a premium of 0.30 points at 175.10 compared with spot closing of 174.80. The number of contracts traded was 24,259.

RIL November 2011 futures were at a premium of 1.25 point at 808.25 compared with spot closing of 807.00. The number of contracts traded was 26,092.

Infosys November 2011 futures were at a premium of 6.25 point at 2758.25 compared with spot closing of 2752.00. The number of contracts traded was 14,548.

Among Nifty calls, 5100 SP from the November month expiry was the most active call with addition of 1.21 million or 26.31%.

Among Nifty puts, 5000 SP from the November month expiry was the most active put with contraction of 1.31 million or 18.35%.

The maximum Call OI outstanding for Calls was at 5100 SP (5.83 mn) and that for Puts was at 5000 SP (5.83 mn).

The respective Support and Resistance levels are: Resistance 5007.88-- Pivot Point 4963.66-- Support 4890.53.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.01 for November -month contract.

The top five scrips with highest PCR on OI were Kotak Bank 4.67, Syndicate Bank 3.22, Siemens 2.95, Ruchi Soya 2.50, and Patni 2.25.

Among most active underlying, SBI witnessed a contraction of 0.93% of Open Interest (OI) in the November month futures contract followed by Reliance witnessed an addition of 4.68% of Open Interest (OI) in the near month contract. Meanwhile Tata Motors witnessed an addition of 9.20% in the November month futures. Also, ICICI Bank witnessed an addition of 6.24% in Open Interest (OI) in the November month contract followed by Tata Steel witnessed an addition of 1.07% in Open Interest (OI) in the November month contract.