Nifty ends lower as RBI unexpectedly hiked repo rate

Nifty snapped a four-day rally to close sharply lower after new Reserve Bank governor Raghuram Rajan surprised markets with a 0.25 per cent repo rate hike on Friday.

After exhibiting strong up-move in previous session, volatility was witnessed as nifty weakened once again after recovering from a lower opening as investors booked some of their profits in rate sensitive counters ahead of Reserve Bank of India’s (RBI’s) monetary policy announcement. Sentiments remained subdued after Indian rupee depreciated against dollar in early deals. Rupee opened at 62.05 against the dollar compared to yesterday’s closing level of 61.77/dollar. In late morning trade, index tumbled and hit fresh intraday low after the Reserve Bank of India (RBI), in a surprise decision, raised its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after mid-quarter monetary policy review. Index trimmed losses in early afternoon but weakness continued on the street due to selling pressure from rate sensitive counters. In the last of leg of trade, index pared substantial losses and managed to close above its crucial 6,000 level as new governor’s reiteration that growth will not be impacted with the 25 basis point hike in the repo rate due to the number of reforms taken up in the recent past to improve investment sentiment. The lower levels attracting investors, keen to enter the markets, also minimized the damage up to certain extent.

NSE sectoral indices made a red closing. CNX Pharma surged by 0.20%. On the other hand, CNX Realty down by 7.47%, CNX PSU Bank down by 4.35%, CNX Bank down by 4.14%, CNX Finance down by 3.33% and CNX Service down by 2.14% there were the loser on sectoral indices.

The India VIX increased by 0.94% at 24.73 as compared to its previous close of 24.50 on Thursday. The 50-share CNX Nifty lost 103.45 points or 1.69 % to settle at 6,012.10.

Nifty September 2013 futures closed at 6037.50 on Friday at a premium of 25.40 points over spot closing of 6,012.10, while Nifty October 2013 futures ended at 6082.45 at a premium of 70.35 points over spot closing. Nifty September futures saw contraction of 1.27 million (mn) units taking the total outstanding open interest (OI) to 14.92 mn units. The near month September 2013 derivatives contract will expire on September 26, 2013.

From the most active contracts, DLF September 2013 futures last traded at a premium of 1.20 points at 152.05 compared with spot closing of 150.85. The number of contracts traded was 32,348.

Tata Motors September 2013 futures last traded at a discount of 1.90 points at 340.10 compared with spot closing of 342.00. The number of contracts traded was 21,163.

Yes Bank September 2013 futures last traded at a premium of 3.30 points at 358.10 compared with spot closing of 354.80. The number of contracts traded was 65,598.

HDFC Bank September 2013 futures last traded at a premium of 3.60 points at 661.75 compared with spot closing of 658.15. The number of contracts traded was 25,283.

ICICI Bank September 2013 futures were at a discount of 0.85 points at 992.30 compared with spot closing of 993.15. The number of contracts traded was 41,095.  Among Nifty calls, 6,000 SP from the Sep month expiry was the most active call with an addition of 0.14 million open interest.

Among Nifty puts, 5,600 SP from the Sep month expiry was the most active put with contraction of 0.16 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (4.10mn) and that for Puts was at 5,600 SP (5.16 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6117.75 -- Pivot Point 6025.3 -- Support -- 5919.65.

The Nifty Put Call Ratio (PCR) OI wise, stood at 1.64 for September month contract.

The top five scrips with highest PCR on OI were, Mcleodruss 9.97, CESC 4.33, Coal India 1.87, DR Reddy 1.66, and ITC 1.62.

Among most active underlying, SBI witnessed an addition of 0.11 million in Open Interest in the Sep month futures contract followed by United Spirits with contraction of 0.24 million Open Interest in the near month contract; ICICI Bank witnessed contraction of 0.68 million of Open Interest in the Sep month futures. Reliance Industries witnessed a contraction of 0.81 million in Open Interest in the Sep month contract and Axis Bank witnessed contraction of 0.69 million in Open Interest in the near month futures contract.