Weakness in heavyweights drags Nifty lower

Nifty snapped it two days of positive closing and ended the choppy day of trade in the red with a cut of over half a percent on Wednesday. The global cues continued to remain unsupportive as Bernanke fueled global-growth concerns. While, selling witnessed in key heavyweights too weighed on the sentiments on the domestic front. Earlier, the market opened in the red tracking weak global cues after US Federal Reserve Chairman Ben Bernanke’s statement that US economy was growing very slowly. Though, thereafter, the index trimmed its losses to touch the intraday high and regained its crucial 5,550 level and holding that level traded slightly below its neutral line till early noon but, the index lost its track completely and witnessed a sharp downfall during the afternoon due to weakness in index heavyweights like, Reliance Industries, SBI, HDFC, ONGC and Infosys, while weak start in European counterparts too dampened the sentiments. Oil & Gas heavyweight Reliance Industries (RIL) ended the day with a cut of about a percent on reports that increase in natural gas output from the D6 block in the Krishna-Godavari (KG) basin, operated by RIL, may not be possible in the next 36 months. However, PSU oil marketing companies viz, BPCL, HPCL and IOC all ended with a gain in the range of 0.50-1.50 percent as the international crude prices have fallen overnight and also, the Finance minister Pranab Mukherjee said that the government was open to increasing the fuel subsidy beyond the budgeted level, if needed. Afterwards, in the final hours, Nifty traded in the tight band and finally snapped the sluggish day of trade with a cut of over half a percent.

On the global front, the US markets extended their fall overnight after the Fed chief came with frail view of economy and also refrained from announcing any further stimulus measures that turned the markets’ mood cautious while, most of the Asian equity indices finished the day’s trade in the negative terrain on Wednesday. Moreover, all the European counterparts were trading in the negative terrain where major indices like CAC, DAX and FTSE were witnessing a cut of about a percent at this point of time. Back home, on the sectoral front, all the indices on NSE declined, Bank Nifty remained the major laggard, losing 0.75% followed by CNX Realty down 0.52%, CNX IT 0.36% and CNX Infra by 0.05%. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 3.05% and reached 18.58, while S&P Nifty closed at 5,526.85 losing 29.30 points or 0.53%.

The India VIX witnessed an addition of 3.05% at 18.58 on Wednesday as compared to its previous close of 18.03 on Tuesday.  

The 50-share S&P CNX Nifty declined 29.30 points or 0.53% and settled at 5,526.85.

Nifty June 2011 futures closed at 5,533.00, at a premium of 6.15 points over spot closing of 5,526.85, while Nifty July 2011 futures were at 5,547.50 at a premium of 20.65 points over spot closing. The near month June 2011 derivatives contract expires on Thursday, June 30, 2011.

Nifty June futures saw addition of 5.30% or 1.32 million (mn) units, taking the total outstanding open interest (OI) to 26.32 mn units.

From the most active underlying, SBI’s June 2011 futures closed at a premium of 13.35 points at 2305.00 compared with spot closing of 2291.65. The number of contracts traded was 19,497.

Tata Motors June 2011 futures were at a premium of 3.50 point at 1031.00 compared with spot closing of 1027.50. The number of contracts traded was 20,400.

Tata Steel June 2011 futures were at a premium of 1.45 points at 579.00 compared with spot closing of 577.55. The number of contracts traded was 12,029.

ICICI Bank June 2011 futures were at a premium of 5.35 at 1056.35 compared with spot closing of 1051.00. The number of contracts traded was 12,713.

RIL June 2011 futures were at a premium of 1.65 points at 953.00 compared with spot closing of 951.35. The number of contracts traded was 11,836.

Among Nifty calls, 5600 SP from the June month expiry was the most active call with an addition of 0.76 million or 14.07%.

Among Nifty puts, 5500 SP from the June month expiry was the most active put with addition of 0.14 million or 2.05%.

The maximum Call OI outstanding for Calls was at 5600 SP (6.16 mn) and that for Puts was at 5500 SP (7.08 mn).

The respective Support and Resistance levels are: Resistance 5550.66-- Pivot Point 5532.78-- Support 5508.96.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.32 for June -month contract.

The top five scrips with highest PCR on OI were BEML- 3.00, Sintex - 2.00, Bharat Forge -2.00, MRF- 2.00 and Piramal Healthcare - 1.14.

Among most active underlying, Tata Motors witnessed an addition of 5.37% of Open Interest (OI) in the June month futures contract followed by State Bank of India (SBI) which too added 5.45% of Open Interest (OI) in the near month contract. Meanwhile Reliance Industries witnessed an addition of 2.02% of OI in the June month futures.