Rate hike fears drag Nifty below 6,200 levels

Extending southward journey to fourth straight session, Nifty made a negative start as investors reacted negatively to the double whammy of contraction in IIP and surge in Consumer Price Index. India's annual industrial output growth, measured by index of industrial production (IIP), contracted by 1.8% at 168.5 in the month of October over the corresponding month of previous year. Fed tapering fears coupled with rate hike worries too spooked investors' sentiments. Moreover, sentiments also remained dampened after the CPI (Combined) for November 2013 on point to point basis surged to nine months high level at 11.24%. Some pessimism also came in after Reserve Bank of India (RBI) Governor Raghuram Rajan said inflation was higher than the central bank's comfort zone, while growth was weaker than estimated and vowed to calibrate policy carefully. On the global front, the US markets remained under pressure on concern of Fed scaling back its stimulus program in the near future after a report showed slightly stronger than expected retail sales growth in the month of November, also shrugging the report of a sharp jump in weekly jobless claims. However, Asian equity benchmarks, after a sluggish opening, pared their gains to enter into green terrain.  Continue selling was witnessed in frontline blue chip stocks in late morning as the rupee was traded lower at 62.14/15 per dollar as against previous close of 61.81/82 per dollar.

Blood bath prevailed on street in noon trade lower around 3/4th of a percent, below the crucial 6,200 levels despite the positive global set-up. European shares too edged higher even as investors speculated over when the U.S. Federal Reserve could unwind its bond-buying program. Last leg of trade, index, witnessed a nasty blow of over a percent and concluded below the crucial 6,200 levels.

NSE sectoral indices made a red closing; CNX PSU Bank down by 2.49%, CNX Bank down by 2.31%, CNX Finance by 2.22%, CNX Realty by 1.99% and CNX Infra down by 1.73% were the top losers on index. On the other hand, there was no gainer on index. The India VIX increased by 0.56% at 17.84 as compared to its previous close of 17.74 on Thursday. The 50-share CNX Nifty decreased by 68.65 points or 1.10% to settle at 6,168.40.

Nifty December 2013 futures closed at 6197.75 on Friday at a premium of 29.35 points over spot closing of 6,168.40, while Nifty January 2014 futures ended at 6252.30 at a premium of 83.90 points over spot closing. Nifty December futures saw contraction of 0.23 million (mn) units taking the total outstanding open interest (OI) to 22.00 mn units. The near month December 2013 derivatives contract will expire on December 26, 2013.

From the most active contracts, JP Associates December 2013 futures traded flat compared with spot closing of 51.35. The number of contracts traded was 13,384.

DLF December 2013 futures were at a premium of 0.30 points at 151.15 compared with spot closing of 150.85. The number of contracts traded was 10,942. 

Tata Motors December 2013 futures were at a premium of 1.50 points at 371.80 compared with spot closing of 370.30. The number of contracts traded was 17,486. 

Tata Steel December 2013 futures were at a premium of 1.55 points at 418.00 compared with spot closing of 416.45. The number of contracts traded was 13,433. 

Yes Bank December 2013 futures were at a premium of 2.85 points at 367.85 compared with spot closing of 365.00. The number of contracts traded was 12,180. 

Among Nifty calls, 6,300 SP from the December month expiry was the most active call with an addition of 1.03 million open interest.

Among Nifty puts, 6,000 SP from the December month expiry was the most active put with an addition   of 0.27 million in open interest.

The maximum OI outstanding for Calls was at 6,300 SP (6.46 mn) and that for Puts was at 6,000 SP (5.32 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6197.53-- Pivot Point 6179.47- Support -- 6150.33.The Nifty Put Call Ratio (PCR) OI wise, stood at 1.04 for December month contract. The top five scrips with highest PCR on OI were, Mcleodruss 1.83, Tata Steel 1.17, DR Reddy 1.06, Axis Bank 1.02 and MRF 1 .00.

Among most active underlying, Power Grid Corporation of India witnessed an addition of 1.90 million  in Open Interest in the December month futures contract followed by SBI  with marginal  an addition of 0.07 million  in the near month contract; United Spirits witnessed  contraction of 0.07 million of Open Interest in the December month futures. Reliance Industries witnessed an addition of 0.13 million of Open Interest in the December month contract and TCS witnessed an addition of 0.04 million in Open Interest in the near month futures contract.