Nifty edges below 6,150 levels on rate hike fears

Snapping five days of continuous fall, Nifty made a positive start with a gain of over half a percent, in early deals tracking firm global cues. The US markets ended higher amid expectations that Federal Reserve will keep policy loose even after deciding to taper its asset purchases in its upcoming monetary policy scheduled on Dec17-18. Moreover, most of the Asian equity markets were trading in the green at this point of time tailing US cues and the Japanese market has taken the lead as yen weakened against dollar. Strong buying was witnessed in frontline blue chip stocks on the street in late morning deals after India Inc raised hopes that spurt in inflation to a 14-month high of 7.52 percent in November should not come in the way of the Reserve Bank's formulating an accommodative monetary policy. Further, the announcement that the committee of manufacturing, chaired by Prime Minister Manmohan Singh, is likely to consider tax incentives and subsidies soon for making the manufacturing sector more competitive also added to the optimistic sentiments. However, gains remained capped as the rupee edged lower against the dollar.

Capitulating to fresh bout of selling pressure, Nifty, erased half of its early gains, slipped to day’s lowest point in noon trade as selected investors preferred cashing in their profits ahead of the start of European markets amidst prevailing caution ahead of Reserve Bank of India's meeting on Wednesday where it is likely to raise rates for the third time in four months. Meanwhile, broader indices also following suit have trimmed most of their gains. Nevertheless, positive regional counterparts mainly kept the momentum positive for index. In the last hour of trade, citing the upcoming Fed meeting later in the day that may bear a negative impact on the market tomorrow, wary investors offloaded positions, which mainly dragged the index lower and ended with loss of over quarter of a percent below the crucial 6,150 levels.

NSE sectoral indices made a red closing; CNX Finance down by 1.57%, CNX Bank down by 1.44%, CNX PSU Bank down by 1.01%, CNX Energy down by 0.76% and CNX Service down by 0.71% were the top losers on index. On the other hand, CNX Pharma up by 1.76%, CNX FMCG up by 0.67%, CNX MNC up by 0.61%, CNX Media up by 0.53% and CNX Infra up by 0.48% were the gainer on index.

The India VIX decreased by 0.16% at 18.33 as compared to its previous close of 18.36 on Monday. The 50-share CNX Nifty decreased by 15.65 points or 0.25% to settle at 6,139.05.

Nifty December 2013 futures closed at 6160.85 on Tuesday at a premium of 21.80 points over spot closing of 6,139.05, while Nifty January 2014 futures ended at 6214.80 at a premium of 75.75 points over spot closing. Nifty December futures saw contraction of 0.59 million (mn) units taking the total outstanding open interest (OI) to 21.86 mn units. The near month December 2013 derivatives contract will expire on December 26, 2013.

From the most active contracts, Apollo Tyre December 2013 futures traded at a premium of 0.45 points at 87.00 compared with spot closing of 86.55. The number of contracts traded was 16,459.

HDFC Bank December 2013 futures were at a discount of 0.10 points at 659.15 compared with spot closing of 659.25. The number of contracts traded was 20,643. 

Aurobindo Pharma December 2013 futures were at a premium of 0.25 points at 354.85 compared with spot closing of 354.60. The number of contracts traded was 20,488. 

Ranbaxy Laboratories December 2013 futures were at a premium of 2.80 points at 440.95 compared with spot closing of 438.15. The number of contracts traded was 16,253. 

ICICI Bank December 2013 futures were at a premium of 11.20 points at 1102.50 compared with spot closing of 1091.30. The number of contracts traded was 18,832. 

Among Nifty calls, 6,300 SP from the December month expiry was the most active call with an addition of 0.31 million open interest.

Among Nifty puts, 6,000 SP from the December month expiry was the most active put with an addition   of 0.06 million in open interest.

The maximum OI outstanding for Calls was at 6,300 SP (7.07 mn) and that for Puts was at 6,000 SP (5.68 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6175.4-- Pivot Point 6154.2- Support -- 6117.85.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 2.00, Infosys 1.62, Auro Pharma 1.56, Axis Bank 1.25 and HDFC Bank 1.24.

Among most active underlying, Power Grid Corporation of India witnessed an addition of 2.41 million  in Open Interest in the December month futures contract followed by SBI  with marginal  an addition Open Interest in the December month contract; United Spirits witnessed  contraction of 0.32 million of Open Interest in the December month futures. Reliance Industries witnessed contraction of 0.09 million of Open Interest in the December month contract and TCS witnessed contraction of 0.02 million in Open Interest in the near month futures contract.