Nifty sustains downward spiral for seventh consecutive session

Trading sentiment remained bearish for seventh straight session after risk aversion intensified across the board as a slew of gloomy developments from the Euro-zone spooked already restless sentiments. The spike in Spanish government bond yields and mounting worries that the exacerbating Euro-zone debt trouble would bite into global economic growth worsen the sentiments. Apart from euro-zone jitters, falling rupee resulted outflow of foreign money, was the main concern for the market. The rupee was trading at 51.27 to the dollar (slipped 38 paise), and at 69.40 to an euro (lost 83 paise). However, bulls made attempts to stage a comeback in the late trade and the index pared most of its initial losses ending at its high point of the day but, with a cut of over half a percentage point reclaiming its crucial 4,900 mark.

The domestic index S&P CNX Nifty continued its southbound journey for yet another day on the tune of global rout breaching crucial 4,900 level in the opening trade. Afterwards, the index extended its losses amid intense selling pressure in other Asian markets. Moreover, banking shares continued their downward trend on worries that rising slippages and provisioning due to high interest rates would impact earnings in coming quarters. ICICI Bank and State Bank of India lost about 1-2 percent. The local index touched its intraday low in early noon trade breaching psychological 4,850 mark as sentiment remained subdued after Fertilisers stocks plunged after Finance Ministry rejected a policy drafted by the Planning Commission to attract new investment in the urea sector, saying the proposals are unrealistic, unviable and will lead to high subsidy outgo. But, it was the last leg of trade where market pared most of its initial losses recapturing its crucial 5,850 mark following recovery in European markets. Moreover, PSU oil marketing companies viz. BPCL, HPCL and IOC witnessed decent gains as international crude prices fell sharply overnight. Finally, the index snapped the trade with a loss of over half a percent. However, short covering in some of the blue-chip stocks helped Nifty in defending 4,900 mark. Volume was very high due to sharp fall and then recovery amid extreme volatility. Total traded turnover was more than Rs 2.09 lakh crore.

On the global front, the US markets slumped for yet another day on Thursday, while Asian stocks slumped after a spike in Spanish government borrowing costs added to the uncertainty over Europe’s debt crisis. Moreover, European markets recovered a bit after a subdued opening. However, the major indices CAC and DAX were trading with a marginal cut. Back home, on the sectoral front on NSE, CNX FMCG remained the major loser, down 1.78% followed by CNX Realty down by 1.74% and CNX PSU Bank down by 1.36% while, CNX Media and CNX Pharma rose 0.65% and 0.50% respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, down 1.26% and reached 26.58.

The 50-share S&P CNX Nifty declined 28.95 points or 0.59% and settled at 4,905.80.

Nifty November 2011 futures closed at 4,923.15 at a premium of 17.35 points over spot closing of 4,905.80, while Nifty December 2011 futures were at 4,950.00 at a premium of 44.20 points over spot closing. The near month November 2011 derivatives contract expires on Thursday, November 24, 2011. Nifty November futures saw addition of 1.57 million (mn) units taking the total outstanding open interest (OI) to 26.62 mn units.

From the most active contract by contract value, SBI’s November 2011 futures were at a discount of 4.00 point at 1722.00 compared with spot closing of 1726.00. The number of contracts traded was 59,580.

L&T November 2011 futures were at a premium of 3.10 point at 1252.00 compared with spot closing of 1248.90. The number of contracts traded was 19,226.

ICICI Bank November 2011 futures were at a premium of 2.85 points at 775.15 compared with spot closing of 772.30. The number of contracts traded was 26,918.

Tata Steel November 2011 futures were at a premium of 1.45 point at 392.70 compared with spot closing of 391.25. The number of contracts traded was 25,271.

Tata Motors November 2011 futures were at a premium of 0.55 point at 171.55 compared with spot closing of 171.00. The number of contracts traded was 21,799.

Among Nifty calls, 4900 SP from the November month expiry was the most active call with addition of 11.98 million or 36.68%.

Among Nifty puts, 4900 SP from the November month expiry was the most active put with contraction of 0.88 million or 14.00%.

The maximum Call OI outstanding for Calls was at 4900 SP (4.46 mn) and that for Puts was at 4900 SP (5.41 mn).

The respective Support and Resistance levels are: Resistance 4935.15-- Pivot Point 4886.55-- Support 4857.20.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.78 for November -month contract.

The top five scrips with highest PCR on OI were BF Utilities 5.00, Kotak Bank 4.67, Syndicate Bank 3.22, Patni 2.34 and Siemens 2.15.

Among most active underlying, SBI witnessed an addition of 1.48% of Open Interest (OI) in the November month futures contract followed by Tata Steel witnessed a contraction of 4.50% of Open Interest (OI) in the near month contract. Meanwhile Reliance witnessed an addition of 3.24% in the November month futures. Also, ICICI Bank witnessed an addition of 1.68% in Open Interest (OI) in the November month contract followed by Tata Motors witnessed an addition of 11.07% in Open Interest (OI) in the November month contract.