Nifty plunges below 5,000 mark ahead of EU summit

S&P CNX Nifty clobbered out of shape on Thursday and snapped the session below its crucial 5,000 mark with triple digit cut as investors booked profits across the board ahead of European Union summit. The optimism surrounding the EU Summit faded after Germany reportedly rejected plan of running two separate bailout funds. Demand of BJP led opposition parties for resignation of Home Minister P Chidambaram on his alleged role in 2G spectrum case also kept the investors nervous.

Earlier, the Indian equity market made a weak start amid weakness across Asian region. Moreover, the government’s decision to suspend FDI in multi-brand retail also dampened the trading sentiment. Stocks like, Pantaloon Retail, Vishal Retail and Store One all edged lower in the trade while, Metal stocks fell over three percent in the trade as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 0.63 percent on December 7, 2011. Market breached its crucial 5,000 level in mid morning trade as investors shrugged off positive inflation numbers. Primary articles inflation for week ended November 26 has come in at 6.92% versus 7.74%, food articles inflation at 6.60% versus 8%, while fuel group inflation remains unchanged at 15.53%. India's food price index rose at its slowest pace in nearly 4 months. Market continued to struggle in the afternoon trade after a trial court in Delhi accepted Janata Party president Subramanian Swamy's plea to examine two witnesses in the 2G scam case. The court today allowed Swamy to present his case against Union Home Minister P Chidambaram in the 2G scam case. Swamy will have to argue his case against the former Finance Minister from the witness box on December 17 and explain as to why he wants key witnesses examined. Finally, market snapped the day’s trade near its intraday low with a cut of over two percentage point.

On the global front, the US markets made a mixed closing on Wednesday while, Asian stocks dropped ahead of a European summit on the region’s sovereign debt crisis, and after economic data from Japan and Australia signaled the global economy is slowing. However, European counterparts were trading in the positive terrain at this point of time. Back home, all the sectoral indices on the NSE hammered badly and settled in the red, CNX Realty remained the major loser, losing 4.01% followed by CNX Infra down 3.70% and CNX Metal down by 3.14% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 8.01% and reached 28.58.

The India VIX witnessed an addition of 8.01% at 28.48 as compared to its previous close of at 26.46 on Wednesday.

The 50-share S&P CNX Nifty lost 118.95 points or 2.35% to settle at 4,943.65.

Nifty December 2011 futures closed at 4,948.60 at a premium of 4.95 points over spot closing of 4,943.65, while Nifty January 2011 futures were at 4,972.00 at a premium of 28.35 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 6.75% or 1.55 million (mn) units taking the total outstanding open interest (OI) to 24.55 mn units.

From the most active contract by contract value, SBI's December 2011 futures were at a discount of 6.00 point at 1857.90 compared with spot closing of 1863.90. The number of contracts traded was 38,184.

ICICI Bank December 2011 futures were at a premium of 3.90 point at 749.00 compared with spot closing of 745.10. The number of contracts traded was 29,794.

L&T December 2011 futures were at a premium of 9.00 at 1269.00 compared with spot closing of 1260.00. The number of contracts traded was 13,803.

RIL December 2011 futures were at a premium of 4.10 points at 781.15 compared with spot closing of 777.05. The number of contracts traded was 19,601.

Infosys December 2011 futures were at a premium of 13.50 point at 2731.00 compared with spot closing of 2717.50. The number of contracts traded was 10,136.   

Among Nifty calls, 5100 SP from the December month expiry was the most active call with an addition of 1.02 million or 16.06%.

Among Nifty puts, 4900 SP from the December month expiry was the most active put with a contraction of 0.21 million or 4.01%.

The maximum Call OI outstanding for Calls was at 5100 SP (7.41 mn) and that for Puts was at 4900 SP (4.96 mn).

The respective Support and Resistance levels are: Resistance 5021.31-- Pivot Point 4971.38-- Support 4893.71.

The Nifty Put Call Ratio (PCR) OI wise stood at 2.65 for December -month contract.

The top five scrips with highest PCR on OI were Patni 12.40, Voltas 6.00, Cipla 2.21, Areva T&D 2.00, and Wipro 1.78.

Among most active underlying, SBI witnessed an addition of 2.52% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 1.86% of Open Interest in the near month contract. Meanwhile RIL witnessed an addition of 4.31% in the December month futures. Also, Tata Steel witnessed an addition of 2.41% in Open Interest in the December month contract. Finally, L&T witnessed an addition of 8.44% of Open Interest in the near month futures contract.