Nifty hits lowest level in almost 2 weeks as manufacturing PMI decelerates

Nifty made a gap-up opening in early deals on Wednesday as sentiments remained higher on report that foreign institutional investors (FIIs) bought shares worth a net Rs 10.16 crore on January 1, 2014, as per provisional data from the stock exchanges. Some support also came in from rally in shares of public sector oil marketing companies (PSU OMCs) as their under-recovery on diesel declined for the first fortnight of January 2014 and after reports of hike in the price of non-subsidised cooking gas (LPG) by a steep Rs 220 per cylinder on Wednesday on firming international rates. Indian rupee was marginally higher in a range-bound trade, at 61.82/83 versus previous close of 61.90/91 per dollar. However, traders remained a little cautious ahead of the HSBC Manufacturing PMI data to be released later in the day. India’s manufacturing sector had witnessed an expansion in November for the first time since July, driven by rising new domestic orders. Sentiments got stronger in late morning as Commerce and Industry Minister Anand Sharma has asserted that the government will continue its endeavour for liberalising the FDI Policy to ensure that India retains its leadership position for attracting foreign investments.

The trend reversal that took place in noon trades literally took traders for surprise, as what started as an extremely promising session of trade turned out to be nothing less than catastrophe, with markets clocking loss of over a percent. Profit-booking hit the blue-chips in late-trade and took the steam out of the market, which in the morning deals were trading close to their record high levels. Reportedly, late sell-off was also blamed to repositioning in foreign portfolios at the start of new calendar year. Further, weaker manufacturing data also deterred sentiments to some extent. On the macro-front, after picking up pace in the past three consecutive months, India's manufacturing sector, decelerated marginally in December as a slowdown in domestic order flows led to slower output growth. The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production - dropped from 51.3 in November to 50.7 in December. In backdrop of mixed global cues and absence of positive triggers at home front, Nifty, ended at day’s low point, below the crucial 6,250 levels. The cuts were nastier for broader indices, which went home with loss of close to two percent.

Most of the NSE sectoral indices made a green closing; CNX IT up by 0.16% were the top gainers on index. On the other hand, CNX Realty down by 2.58%, CNX Infra down by 2.78%, CNX PSU Bank down by 2.01%, CNX FMCG down by 1.94%, and CNX PSE down by 1.91% were the top losers on index.

The India VIX increased by 6.22% at 16.55 as compared to its previous close of 15.58 on Wednesday. The 50-share CNX Nifty decreased by 80.50 points or 1.28% to settle at 6,221.15.

Nifty January 2014 futures closed at 6257.75 on Thursday at a premium of 36.60 points over spot closing of 6,221.15, while Nifty February 2014 futures ended at 6302.20 at a premium of 81.05 points over spot closing. Nifty January futures saw contraction of 0.49 million (mn) units taking the total outstanding open interest (OI) to 19.31 mn units. The near month January 2014 derivatives contract will expire on January 30, 2014.

From the most active contracts, Reliance Communications January 2014 futures traded at a premium of 1.05 points at 130.70 compared with spot closing of 129.65. The number of contracts traded was 15,803.

DLF January 2014 futures were at a premium of 0.25 points at 166.45 compared with spot closing of 166.20. The number of contracts traded was 12,386. 

Tata Steel January 2014 futures were at a premium of 3.65 points at 421.65 compared with spot closing of 418.00. The number of contracts traded was 19,212.  

Reliance Industries January 2014 futures were at a premium of 7.85 points at 880.85 compared with spot closing of 873.00. The number of contracts traded was 14,403. 

United Spirits January 2014 futures were at a premium of 12.05 points at 2627.05 compared with spot closing of 2615.00. The number of contracts traded was 12,394.  Among Nifty calls, 6,500 SP from the January month expiry was the most active call with an addition of 0.41 million in open interest.

Among Nifty puts, 6,200 SP from the January month expiry was the most active put with contraction of 0.04 million open interest.

The maximum OI outstanding for Calls was at 6,500 SP (5.04 mn) and that for Puts was at 6,200 SP (3.67 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6315.87 -- Pivot Point 6263.58 - Support - 6168.87.

The Nifty Put Call Ratio (PCR) OI wise, stood at 0.82 for January month contract.

The top five scrips with highest PCR on OI were Apollotyre 1.67, Mcleodruss 1.46, Hexaware 1.29,  Jubl Food 1.25and JSW Steel 1.24.

Among most active underlying, SBI witnessed contraction of 0.03 million in Open Interest in the January month futures contract followed by United Spirits witnessed  contraction of 0.12 million of Open Interest in the January month contract; Reliance Industries witnessed an addition of 0.22 million of Open Interest in the January month futures. Infosys witnessed contraction of 0.08 million of Open Interest in the January month contract and TCS witnessed contraction of 0.24 million in Open Interest in the near month futures contract.