Election nervousness drags Nifty below 6,200 mark

Nifty fell for a second consecutive session below 6,200 level on Wednesday as investors locked in profits in shares of blue chip companies ahead of U.S. monthly jobs data and results of state elections due later in the week.

A bout of volatility was witnessed on street in early deals as Nifty edged lower on Wednesday tailing weak global cues. US markets continued their weak trend overnight, dropping from record levels in a broad decline as investors took profits amid signs of a weak holiday shopping season. Moreover, most of the Asian benchmarks were trading lower at this point of time as the prospects of a reduction in the US Federal Reserve’s stimulus early next year prompted investors to cash in gains from their recent rallies. Meanwhile, the Japanese stock market plunged by one and half a percent, with investors indulging in some heavy selling after recent strong gains and yen strengthening. Back home, sentiments also remained dampened on report that Foreign Direct Investment (FDI) into the country declined by about 38 percent, year-on-years, to $2.91 billion in September. Volatility continued on street in late morning as index trimmed  losses and took support at day’s low in late morning deals on lower level buying in selected stocks. Some support came in after industry body Assocham said that narrowing of the current account deficit will help arrest depreciation of the rupee and ease inflation concerns and that may soothe some nerves. Meanwhile, Prime Minister Manmohan Singh has said that market-based pricing and technology are essential as India is expected to become world's third largest energy consumer in seven years. He also said that, in order to bridge the gap between supply and demand, the government is encouraging domestic and global companies to explore onshore and offshore regions.

Positive opening in European markets too supported the index in afternoon trade. CAC and DAX traded firmly during the early deals. Nevertheless, Traders turned nervous in last leg of trade, as flat numbers of the Services PMI weighed negatively on the street, which dragged the index to its lowest point of the day below 6,200 level. The HSBC Business Activity Index posted 47.2 in November compared to 47.1 in October. Meanwhile, the seasonally adjusted HSBC India Composite Output Index too remained below the 50.00 mark, however, up from 47.5 in October to 48.5, as manufacturing production rose in the latest month. Selling in Realty counter too dampened the sentiments despite the Reserve Bank of India (RBI) allowing core investment companies to raise external commercial borrowing (ECB) for projects floated as special purpose vehicle in order to strengthen the flow of resources into the infrastructure sector.

NSE sectoral indices made a red closing; CNX Metal up by 0.27%, CNX PSU Bank up by 1.16% and CNX IT up by 0.10% were the only gainers on index. On the other hand, CNX Realty down by 2.76%, CNX FMCG down by 1.44%, CNX Auto down by 1.08%, CNX Finance down by 0.89% and CNX MNC down by 0.80% were the top losers on index. The India VIX decreased by 4.08% at 23.71 as compared to its previous close of 24.72 on Tuesday. The 50-share CNX Nifty decreased by 40.90 points or 0.66 % to settle at 6,160.95.

Nifty December 2013 futures closed at 6199.15 on Wednesday at a premium of 38.20 points over spot closing of 6,160.95, while Nifty January 2014 futures ended at 6255.5 at a premium of 94.55 points over spot closing. Nifty December futures saw contraction of 0.64 million (mn) units taking the total outstanding open interest (OI) to 18.13 mn units. The near month December 2013 derivatives contract will expire on December 26, 2013.

From the most active contracts, Unitech December 2013 futures last traded at a premium of 0.05 points at 15.75 compared with spot closing of 15.70. The number of contracts traded was 23,494.

Power Grid December 2013 futures were at a discount of 3 points at 92.90 compared with spot closing of 95.90. The number of contracts traded was 24,685. 

Jaiprakash Associates December 2013 futures were at a discount of 0.10 points at 54.60 compared with spot closing of 54.70. The number of contracts traded was 16,409. 

DLF December 2013 futures were at a premium of 0.35 points at 153.35 compared with spot closing of 153.00. The number of contracts traded was 21,382. 

Tata Motors December 2013 futures were at a premium of 2.20 points at 396 compared with spot closing of 393.80. The number of contracts traded was 11,998.

Among Nifty calls, 6,500 SP from the December month expiry was the most active call with an addition of 0.27 million open interest.

Among Nifty puts, 6,000 SP from the December month expiry was the most active put with an addition of 0.13 million in open interest.

The maximum OI outstanding for Calls was at 6,500 SP (5.15 mn) and that for Puts was at 6,000 SP (5.67 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6196.77-- Pivot Point 6173.33-- Support -- 6137.52.The Nifty Put Call Ratio (PCR) OI wise, stood at 1.12 for December month contract. The top five scrips with highest PCR on OI were, DR Reddy 1.73, Power Grid 1.25, Tata Steel 1.10, Infosys 1.01, and SBI 0.98.

Among most active underlying, United Spirits witnessed an addition of 0.11 million in Open Interest in the December month futures contract followed by SBI with an addition of 0.02 million of Open Interest in the near month contract; Reliance Industries witnessed contraction of 0.02 million of Open Interest in the December month futures. Power Grid witnessed an addition of 18.04 million in Open Interest in the December month contract and ICICI Bank witnessed contraction of 0.01 million in Open Interest in the near month futures contract.