Nifty dives below 6,200 as S&P maintains negative outlook

High volatility was witnessed as Nifty pared its intraday gains and closed below psychological 6,200 level as the bulls ran out of steam after the benchmark hit all-time closing high levels last week. A weak rupee against the US dollar also weighed on the sentiment.

A bout of initial volatility was witnessed on street as the nifty alternately swung between positive and negative terrain in earlier deals as investors turned cautious ahead of the ECB meeting and US GDP data to be released later in the day. Street got some support on report that FIIs bought shares worth a net Rs 271.70 crore on Wednesday, November 6, 2013, as per provisional data from the stock exchanges. Volatility continued as index moved in a narrow range in the late morning as rupee hit a low of 62.56 against the dollar, its lowest since October 2 on account of rising dollar demand from private oil companies and traders. 

A sudden surge was witnessed in early afternoon and the index reached fresh intraday highs amid buying witnessed in frontline blue chip stocks such as Infosys, Tata steel and SSLT. The Reserve Bank of India (RBI) has issued guidelines for foreign banks, under which foreign banks operating in the country will enjoy nearly equal terms with local lenders if they move to a wholly owned subsidiary structure. Sentiments also got some support from gross direct tax collection report that featured a rise of 11.6 percent to Rs 3.37 lakh crore during April-October period of 2013. Meanwhile, the government has set direct tax collection target of Rs 6.68 lakh crore for 2013-14, envisaging a growth of 19 percent, as against Rs 5.65 lakh crore in 2012-13.

Final hour of trade mainly turned out to be game changer for index which witnessed reversal of trend to settle near day’s lowest point. Slew of negative factors plagued investors’ sentiment. Firstly, the re-affirmation of negative outlook of India by global rating, S&P, which also warned of potential downgrade of India’s sovereign credit rating if the new government failed to reverse India's low growth. Additionally, downtrend of European shares also added to prevailing caution ahead of US July-September GDP data, which could set the course for the Federal Reserve's policy, something which the index  have been closely below 6,200 level.

NSE sectoral indices made a red closing; CNX IT up by 1.28%, CNX Metal up by 0.75%, CNX Pharma up by 0.06%. On the other hand, CNX PSU Bank down by 3.54%, CNX Realty down by 2.72%, CNX Bank down by 2.10%, CNX Infra down by 1.63% and CNX Finance down by 1.45% there were losers on index.

The India VIX decreased by 1.87 % at 19.87 as compared to its previous close of 20.25 on Wednesday. The 50-share CNX Nifty decreased by 27.90 points or 0.45% to settle at 6,187.25.

Nifty November 2013 futures closed at 6227.30 on Thursday at a premium of 40.05 points over spot closing of 6187.25, while Nifty December 2013 futures ended at 6275.50 at a premium of 88.25 points over spot closing. Nifty November futures saw contraction of 0.74 million (mn) units taking the total outstanding open interest (OI) to 20.83 mn units. The near month November 2013 derivatives contract will expire on November 28, 2013.

From the most active contracts, DLF November 2013 futures last traded at a premium of 0.15 points at 148.70 compared with spot closing of 148.55. The number of contracts traded was 22,151.

Tata Steel November 2013 futures were at a premium of 1.15 points at 348.70 compared with spot closing of 347.55. The number of contracts traded was 27,263. 

Yes Bank November 2013 futures were at a premium of 2.45 points at 363.05 compared with spot closing of 360.60. The number of contracts traded was 19,589. 

Reliance Industries November 2013 futures were at a premium of 7.85 points at 893.40 compared with spot closing of 885.55. The number of contracts traded was 14,895. 

ICICI Bank November 2013 futures were at a premium of 11.95 points at 1061.15 compared with spot closing of 1049.20. The number of contracts traded was 29,578. 

Among Nifty calls, 6,300 SP from the November month expiry was the most active call with an addition of 0.64 million open interest.

Among Nifty puts, 6,000 SP from the November month expiry was the most active put with an addition of 0.19 million open interest.

The maximum OI outstanding for Calls was at 6,400 SP (4.45 mn) and that for Puts was at 6,000 SP (4.55 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6257.2-- Pivot Point 6219-- Support -- 6149.05. The Nifty Put Call Ratio (PCR) OI wise, stood at 1.26 for November month contract. The top five scrips with highest PCR on OI were, Grasim 3.69, Havells 1.26, Infosys 1.10, Bharat Forg 1.00 and JISLJALEQS 1.00.

Among most active underlying, SBI witnessed an addition  of 0.18million of Open Interest in the November month futures contract followed by United Spirits with an addition of 0.24 million of Open Interest in the near month contract; Reliance Industries witnessed an addition of 0.07 million of Open Interest in the November month futures. Tata Consultancy Services witnessed an addition of 0.13 million in Open Interest in the November month contract and ICICI Bank witnessed addition of 0.57 million in Open Interest in the near month futures contract.