Nifty slumps on weak global cues; closes at 6000 level

Nifty slumped below the crucial support level of 6050 with ease due to weak earnings of bluechip stocks and bearish global cues to close at the 6001 mark. Investors seem to be cautious ahead of Vote on Account to be presented by UPA II on Monday. On the global front, Investors’ profit-taking on Thursday brought Asian markets off the three-week highs notched a day earlier on the back of reassuring comments from the Federal Reserve's new chairwoman, Janet Yellen, over the prospects for US growth. There was also an element of caution, with some investors restraining bullish instincts until they see more solid evidence of a strengthening global economy. Additionally, European stocks fell, halting their longest rally this year, on account of disappointing earnings reports from BNP Paribas SA to Nestle SA.

Back home, after making positive start, Nifty lost the momentum in early deals. The mood turned somber tailing the weakness in the global markets. On the domestic front too, the traders turned cautious with the rise in core retail inflation to 8.11% from 8.08% in the previous month that raised concerns that RBI in its upcoming policy review on April 1, 2014 may go for another rate hike, as it has deemed the core inflation above 8% uncomfortably high. Traders also remained concerned about the third straight month of contraction in industrial production by 0.6 per cent in December 2013, presenting a gloomy picture of the industrial scenario in the country.

The weakness in rupee too pressured the markets mid way, the domestic currency after a good start faltered on fresh dollar demand from banks and importers. Barring modest gains in the realty index, none of the sectoral indices showed any resilience and most of them ended lower by over a percent, with banking and capital goods suffering the maximum beating. One spot that remained in green since morning was sugar sector after the Cabinet Committee on Economic Affairs (CCEA) finally approved a subsidy of Rs 3,333 per tonne for exports of raw sugar. There was weakness in some heavyweights that dragged the markets lower.

Meanwhile, sectoral indices on the NSE made a negative closing. CNX PSU Bank down by 2.88%, CNX PSE down by 2.23%, CNX Bank down by 2.06%, CNX Finance down by 2.03%, and CNX Metal  down by 1.95% were remained the top losers in the trade. While, CNX Realty up by 0.59% remained the gainer in the trade.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, up by 2.12% and reached 17.80.The 50-share CNX Nifty decreased by 82.90 points or 1.36% to settle at 6,001.10.

Nifty February 2014 futures closed at 6005.45 on Thursday at a premium of 4.35 points over spot closing of 6,001.10, while Nifty March 2014 futures ended at 6041.55 at a premium of 40.45 points over spot closing. Nifty February futures saw an addition of 1.13 million (mn) units taking the total outstanding open interest (OI) to 16.65 mn units. The near month February 2014 derivatives contract will expire on February 26, 2014.

From the most active contracts, Hindalco Industries February 2014 futures were at a premium of 0.65 points at 100.65 compared with spot closing of 100.00. The number of contracts traded was 9,986. 

Tata Motors February 2014 futures were at a premium of 2.60 points at 377.60 compared with spot closing of 375.00. The number of contracts traded was 15,992. 

Reliance Industries February 2014 futures were at a premium of 1.75 points at 808.55 compared with spot closing of 806.80. The number of contracts traded was 11,391. 

Tata Steel February 2014 futures traded at a premium of 2.85 points at 368.05 compared with spot closing of 365.20. The number of contracts traded was 19,504.

SBI February 2014 futures were at a discount of 3.50 points at 1499.50 compared with spot closing of 1503.00. The number of contracts traded was 30,042.  Among Nifty calls, 6,200 SP from the February month expiry was the most active call with contraction of 0.01 million in open interest.

Among Nifty puts, 6,000 SP from the February month expiry was the most active put with  an addition of 0.40 million open interests.

The maximum OI outstanding for Calls was at 6,200 SP (6.64 mn) and that for Puts was at 6,000 SP (9.49 mn).The respective Support and Resistance levels of Nifty are: Resistance 6066.63-- Pivot Point 6028.87 - Support- 5963.33.

The Nifty Put Call Ratio (PCR) OI wise, finally stood at 1.22 for February month contract. The top five scrips with highest PCR on OI were HCL Tech 1.50, Grasim 1.10, Ultra Cement Company 1.03, PNB 1.09, and Auro Pharma 1.07.

Among most active underlying, State Bank of India witnessed an addition of 0.04 million of Open Interest in the February month futures contract, followed by Reliance Industries witnessing  contraction  of 0.02 million of Open Interest in the February month contract; United Spirits witnessed an addition of 0.05 million of Open Interest in the February month futures. TCS witnessed contraction of 0.20 million of Open Interest in the February month contract and ICICI Bank witnessed contraction of 0.98 million in Open Interest in the expiring February month’s future contract.