Bearish sentiment continue to drag market lower; Nifty below 4,900 mark

Sentiment continued to remain bearish and S&P CNX Nifty once again bludgeoned badly snapping the session with a cut of over one and a half percent breaching its crucial 4,900 mark on the back of weak global cues. Globally, markets weakened after Germany rejected some of the European Union summit draft measures. ECB President Mario Draghi’s comments also battered hopes that the central banks would raise its bond purchases of debt-ridden European nations. The Dow ended below the psychologically-important 12,000 mark.

The domestic market made a gap down opening in sync with the global markets ahead of the impending important European Union summit meeting. Nifty opened well below 4,900 levels and continued to trade sluggishly for the major part of the trading session as selling pressure was seen across the Asian markets as much awaited EU summit failed to secure the full backing of the 27 nations for treaty changes to help fight euro-zone debt crisis. Meanwhile, auto shares declined on reports that passenger car sales would fall to single digits compared with over 10% growth so far. Bajaj Auto, Mahindra & Mahindra and Tata Motors, down over 3 percent each, remained the prominent losers from the Auto sector. Afterwards, the markets weakened further after the government cut economic growth forecast for fiscal 2012 and also said that meeting fiscal targets would be a challenge. Moreover, capital goods shares declined after the segment led the industrial output decline in October. While aviation shares too dampened the sentiments with all three listed companies - Jet Airways, Kingfisher Airlines and SpiceJet ended with a cut of 3-6 percent each on service tax payment issues and the index breached its crucial 4,850 mark for a while in mid noon trade but, at that level market started its northbound journey and pared most of the losses recapturing its crucial 4,900 mark following decent opening in European markets. Although, it was the final half an hour of trade where market lost its grip totally and witnessed steep cut of about 50 points and snapped the day’s trade near its intraday low with a cut of 80 points.

On the global front, the US markets suffered a sharp decline overnight while, all the Asian equity indices butchered on Friday on fears that Europe’s leaders will not agree a deal to tackle their debt crisis as the first day of a crucial summit broke up with plans for a full treaty change in tatters. However, European counterparts were trading mixed at this point of time. Back home, all the sectoral indices on the NSE hammered badly and settled in the red, CNX Auto remained the major loser, losing 2.25% followed by CNX Infra down 2.24% and CNX Media down by 2.05% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 3.32% and reached 29.53.

The India VIX witnessed an addition of 3.32% at 29.53 on Friday as compared to its previous close of at 28.48 on Thursday.

The 50-share S&P CNX Nifty lost 76.95 points or 1.56% to settle at 4,866.70. Nifty December 2011 futures closed at 4,882.25 at a premium of 15.55 points over spot closing of 4,866.70, while Nifty January 2011 futures were at 4,905.50 at a premium of 38.80 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 12.31% or 2.67 million (mn) units taking the total outstanding open interest (OI) to 24.35 mn units.

From the most active contract by contract value, SBI’s December 2011 futures were at a discount of 10.35 point at 1865.15 compared with spot closing of 1875.50. The number of contracts traded was 41,553.

ICICI Bank December 2011 futures were at a premium of 3.20 point at 736.80 compared with spot closing of 733.60. The number of contracts traded was 30,262.

Infosys December 2011 futures were at a premium of 2.15 at 2708.00 compared with spot closing of 2705.85. The number of contracts traded was 15,283.

L&T December 2011 futures were at a premium of 10.00 points at 1236.00 compared with spot closing of 1226.00. The number of contracts traded was 14,609.

RIL December 2011 futures were at a premium of 6.20 point at 759.60 compared with spot closing of 753.40. The number of contracts traded was 22,919.

Among Nifty calls, 5000 SP from the December month expiry was the most active call with an addition of 1.14 million or 21.98%.

Among Nifty puts, 4800 SP from the December month expiry was the most active put with a addition of 0.22 million or 3.83%.

The maximum Call OI outstanding for Calls was at 5000 SP (6.32 mn) and that for Puts was at 4800 SP (5.96 mn).

The respective Support and Resistance levels are: Resistance 4909.45-- Pivot Point 4875.6-- Support 4832.85.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.11 for December -month contract.

The top five scrips with highest PCR on OI were Patni 11.81, Voltas 6.00, Cipla 2.11, Mphasis 1.50 and Wipro 1.44.

Among most active underlying, SBI witnessed an addition of 3.43% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 4.73% of Open Interest in the near month contract. Meanwhile RIL witnessed an addition of 7.09% in the December month futures. Also, Tata Steel witnessed an addition of 2.84% in Open Interest in the December month contract. Finally, Tata Motors witnessed an addition of 2.10% of Open Interest in the near month futures contract.