Nifty dives below 6,150 levels ahead of RBI meet

Pressurized by feeble global cues, Nifty has collapsed in early deals on Monday, with frontline gauges shaving off around one and a half percentage point, tumbling below its crucial 5,200 levels. Investors remained cautious ahead of outcome of the Reserve Bank of India (RBI) and the US Federal Reserve’s policy review meetings scheduled later in the week. Some pessimism also came on report that foreign institutional investors (FIIs) sold shares worth a net Rs 230.96 crore on January 24, 2014. Global cues mainly played the spoilsport for Indian markets with US markets plunging on Friday on some weak earnings announcements and on global sell-off in the equity markets. Asian markets too were trading lower with deep cut amid renewed concerns about the outlook for the global economy on account of recent weak data from China. Fears of more stimulus tapering from the US Federal Reserve too was dampening the sentiments. Japanese markets declined by over two percent as the yen surged to a seven-week high against the dollar. Selling in rate sensitive sectors kept the street under pressure in late morning after Reserve Bank of India Governor Raghuram Rajan commented last week that inflation is a destructive disease which is forcing the central bank to keep interest rates high. Sentiments remained down beat as the rupee hit 62.90 in early trade, its lowest level since November 22, as Asian stocks were trading with heavy losses.  Investors’ sentiments were dampened as Planning Commission Deputy Chairman Montek Singh Ahluwalia has attributed the decline in India's growth rate mainly to domestic factors. Ahluwalia asserted that the one third of prevailing economic downturn could be attributed to global factors and two-thirds to domestic factors.

Further, there was no respite on street in noon trade, which grinded near day’s low on rampant selling pressure. Blood bath continued on street till last leg of trade, closed near its intraday lows below 6,150 levels breaching major crucial support levels never looked in recovery mood. Most of the NSE sectoral indices made a red closing; CNX Realty down by 7.44%,CNX Bank down by 4.02%, CNX Metal down by 3.86%, CNX PSU Bank down by 3.83%, CNX Media down by 3.75% were the top losers on index. On the other hand, there was no gainer on index. The India VIX increased by 17.94% at 18.67 as compared to its previous close of 15.83 on Friday. The 50-share CNX Nifty decreased by 130.90 points or 2.09% to settle at 6,135.85.

Nifty January 2014 futures closed at 6148.05 on Monday at a premium of 12.20 points over spot closing of 6,135.85, while Nifty February 2014 futures ended at 6185.20 at a premium of 49.35 points over spot closing. Nifty January futures saw contraction of 3.21 million (mn) units taking the total outstanding open interest (OI) to 12.65 mn units. The near month January 2014 derivatives contract will expire on January 30, 2014.

From the most active contracts, DLF January 2014 futures were trading flat compared with spot closing of 139.80. The number of contracts traded was 20,537.  

Reliance Industries January 2014 futures were at a discount of 1.70 points at 845.05 compared with spot closing of 846.75. The number of contracts traded was 24,859. 

HDFC Bank January 2014 futures traded at a discount of 6.40 points at 648.60 compared with spot closing of 655.00. The number of contracts traded was 19,376.

ICICI Bank January 2014 futures were at a premium of 1.95 points at 1012.95 compared with spot closing of 1011.00. The number of contracts traded was 28,881. 

SBI January 2014 futures traded at a discount of 1.20 points at 1597.55 compared with spot closing of 1598.75. The number of contracts traded was 39,333.   Among Nifty calls, 6,500 SP from the January month expiry was the most active call with an addition of 0.48 million in open interest.

Among Nifty puts, 6,100 SP from the January month expiry was the most active put with  an addition of 0.02 million open interests.

The maximum OI outstanding for Calls was at 6,500 SP (5.28 mn) and that for Puts was at 6,100 SP (4.23 mn). The respective Support and Resistance levels of Nifty are: Resistance 6172.85 -- Pivot Point 6151.55 – Support- 6114.55.

The Nifty Put Call Ratio (PCR) OI wise, stood at 0.86 for January month contract. The top five scrips with highest PCR on OI were DR Reddy 3.36, Infosys 2.14, HCL Tech 1.96, HDFC 1.67, and Auro Pharma 1.39.

Among most active underlying, SBI witnessed contraction of 1.05 million of Open Interest in the January month futures contract followed by Infosys witnessed contraction of 1.12 million of Open Interest in the January month contract; United Spirits witnessed contraction of 1.16 million of Open Interest in the January month futures. Reliance Industries witnessed contraction of 1.93 million of Open Interest in the January month contract and TCS witnessed contraction of 0.80 million in Open Interest in the near month futures contract.