Concern over GAAR, rupee spooks investors’ sentiment; Nifty breaches 5,100 mark

Bears continued to hold their control over the Indian equity market and Nifty snapped the day’s trade below its crucial 5,100 level with a huge cut of about two percentage point as concerns over GAAR, the weak rupee and the uncertainty in global markets spooked sentiment. On the global front, the US markets closed lower overnight weighed down by the mixed set of economic reports while, Asian equity indices exhibited a mixed close on last trading day of the week as traders turned cautious ahead of the all important jobs data from the world’s biggest economy. Back home, Minister of State for Finance SS Palanimanickam announcement that India is considering a review of the Double Taxation Avoidance Treaty with Mauritius to raise revenues too dampened the investors’ sentiments.

Initially, market started on a subdued note amid weak global cues, moreover, sentiments also weighed down as Index heavyweight RIL edged lower on reports that the oil ministry slapped a notice of $1.2 billion, or Rs 7,000 crore, on the company for a sharp fall in gas output from its D6 field in the KG basin. Afterwards, the index tried hard to hold 5,150 level but, in the early noon trade it breached that level as sentiments were dampened by banking and realty shares. Banks witnessed selling pressure after Macquarie in a report said, that the RBI directives to meet Basel III regulations could lead to an equity dilution in banks of roughly $30-35 billion over the next five years. After that, market continued its southbound journey as weakness in European markets further aggravated the slide. Selling intensified in the late trade and market breached its important 5,100 level as traders remained concerned over the depreciating rupee and on the likely wording of the General Anti-Avoidance Rule in the Finance Bill. Finally, Nifty snapped the trade near its intraday low with a sharp cut of about two percentage point.

Meanwhile, most of the sectoral indices on the NSE settled in the negative territory with CNX PSU Bank losing the most, ending with a cut of 3.74% followed by Bank Nifty down by 3.20% and CNX Infra down by 2.77% while, CNX Pharma marginally up 0.63% remained the lone gainer on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, soared 9.71% and reached 21.12.

The India VIX witnessed an addition of 9.71% at 21.12 as compared to its previous close of at 19.25 on Thursday.

The 50-share S&P CNX Nifty lost 101.55 points or 1.96% to settle at 5,086.85.

Nifty May 2012 futures closed at 5097.95 at a premium of 11.10 points over spot closing of 5086.85, while Nifty June 2012 futures were at 5115.85 at a premium of 29.00 points over spot closing. The near month May 2012 derivatives contract will expire on Thursday i.e. May 31, 2012. Nifty May futures saw an addition of 0.37 million (mn) units taking the total outstanding open interest (OI) to 18.88 mn units.

From the most active contract, Tata Motors May 2012 futures were at a discount of 0.35 point at 301.25 compared with spot closing of 301.60. The number of contracts traded was 15,948.

BHEL May 2012 futures were at a premium of 1.05 point at 215.35 compared with spot closing of 214.30. The number of contracts traded was 9,889.

Pantaloon Retail May 2012 futures were at a premium of 2.40 points at 161.95 compared with spot closing of 159.55. The number of contracts traded was 13,557.

Tata Steel May 2012 futures were at a premium of 2.10 point at 434.50 compared with spot closing of 432.40. The number of contracts traded was 12,443.

Reliance Industries May 2012 futures were at a discount of 4.20 point at 722.80 compared with spot closing of 727.00. The number of contracts traded was 10,604.  

Among Nifty calls, 5300 SP from the May month expiry was the most active call with an addition of 0.77 million open interest.

Among Nifty puts, 5000 SP from the May month expiry was the most active put with an addition of 1.53 million open interest.

The maximum OI outstanding for Calls was at 5300 SP (5.34mn) and that for Puts was at 5000 SP (6.66mn).

The respective Support and Resistance levels are: Resistance 5152.5-- Pivot Point 5111.55-- Support 5045.9.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.06 for May -month contract.

The top five scrips with highest PCR on OI were ABG Ship 53.00, Grasim 2.08, MRPL 2.00, Asian Paint 1.88, and SKumars 1.86

Among the most active underlying, Suzlon witnessed contraction of1.32 million of Open Interest in the April month futures contract followed by IFCI which witnessed an addition of 1.32 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.55 million in the April month futures. Also, JP Associates Infra witnessed an addition of 0.82 million in Open Interest in the April month contract. Finally, Tata Motors witnessed contraction of 0.47 million of Open Interest in the near month futures contract.