Nifty tanks on fears of further rate hike; Closes below 5,900

Nifty extended losses to end nearly 2% down below 5,900 on Monday dragged by financials after the central bank at its mid-quarter policy review on Friday surprisingly hiked repo rate by 25 basis points. Also, weakness in Rupee added to the negative sentiment.

Nifty opened more than a percent below its previous closing on Friday, breaking the psychological 6,000 mark as sentiments took hit after Federal Reserve Bank of St. Louis President James Bullard said on that the US Federal Reserve could make a small stimulus reduction at its next meeting in October 2013. Index was jittery due to selling pressure witnessed in rate-sensitive shares amid looming fear of another hike in repo rates by the Reserve Bank of India to contain inflation and support the rupee. Sentiments also got dampened after Fitch Ratings has cut its growth forecast for India in 2013-14 to 4.8%, from its earlier estimate of 5.7% made in June and 7% in September. Volatility continued as index weakened once again and hit fresh intraday low in late morning trade as rupee lost some ground owing to month-end dollar demand from importers. Weakness continued on the index that hit fresh intraday low in early afternoon trade due to selling in PSU oil marketing companies viz BPCL, HPCL and IOC. Finally the index ended near the lows of the day, down by around two percent at 5890.

The most impacted pack of the trade were banking and realty, while the banking suffered purely on RBI rate hikes, it was a double whammy for the realty, which apart from the rise in rates, also suffered due to a report highlighting the huge inventories of the real estate developers and concern of some distress selling. The non sectoral gauge ‘Sugar’ too remained buzzing with UP based sugar companies suffering cut of around 1-3%, lobbying for an immediate review on current cane pricing and introduction of the revenue sharing model as per the Rangarajan committee recommendations. Investors cautiously waited for the government’s second half market borrowing schedule later today. Bank treasurers and fund managers expect government to stick to its gross borrowing target of Rs 5.79 lakh crore.

NSE sectoral indices made a red closing. CNX IT surged by 0.83% and CNX IT up by 0.18%. On the other hand, CNX PSU Bank down by 5.70%, CNX Realty down by 4.49%, CNX Bank down by 4.45%, CNX Finance down by 3.93%, and CNX Infra down by 2.74% there were the loser on sectoral indices. The India VIX increased by 9.26% at 27.02 as compared to its previous close of 24.73 on Friday. The 50-share CNX Nifty lost 122.35 points or 2.04% to settle at 5,889.75.

Nifty September 2013 futures closed at 5914.40 on Monday at a premium of 24.65 points over spot closing of 5,889.75, while Nifty October 2013 futures ended at 5961.55 at a premium of 71.80 points over spot closing. Nifty September futures saw contraction of 0.21 million (mn) units taking the total outstanding open interest (OI) to 14.71 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 142.05 compared with spot closing of 140.85. The number of contracts traded was 23,875.

Yes Bank September 2013 futures last traded at a premium of 2.95 points at 328.25 compared with spot closing of 325.30. The number of contracts traded was 37,165.

HDFC Bank September 2013 futures last traded at a premium of 3.85 points at 644.50 compared with spot closing of 640.65. The number of contracts traded was 15,557.

ICICI Bank September 2013 futures were at a premium of 3.05 points at 946.55 compared with spot closing of 943.50. The number of contracts traded was 23,327. 

SBI September 2013 futures last traded at a premium of 17.05 points at 1661.05 compared with spot closing of 1644.00. The number of contracts traded was 49,277.

Among Nifty calls, 6,000 SP from the Sep month expiry was the most active call with an addition of 1.52 million open interest.

Among Nifty puts, 5,700 SP from the Sep month expiry was the most active put with an addition of 1.37 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (5.63 mn) and that for Puts was at 5,700 SP (5.56 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5962.3 -- Pivot Point 5916.85 -- Support -- 5844.3.

The Nifty Put Call Ratio (PCR) OI wise, stood at 1.43 for September month contract.

The top five scrips with highest PCR on OI were, Mcleodruss 9.05, CESC 2.33, Coal India 1.94, DR Reddy 1.78, and ITC 1.70.

Among most active underlying, SBI witnessed contraction of 0.03 million in Open Interest in the Sep month futures contract followed by United Spirits with contraction of 0.99 million Open Interest in the near month contract; ICICI Bank witnessed contraction of 0.62 million of Open Interest in the Sep month futures. Reliance Industries witnessed a contraction of 0.64 million in Open Interest in the Sep month contract and Axis Bank witnessed contraction of 0.68 million in Open Interest in the near month futures contract.