Bears hit back with vengeance; Nifty down 1.75%

After a day of relief, bears struck back with a bang on Wednesday and Nifty snapped the day’s trade with a fall of over 80 points breaching its crucial 4,900 level after the rupee fell to an all-time low and the political uncertainty in Greece dampened investor sentiment. On the global front, downtrend continued in the Asian region and all the Asian equity indices crashed on Wednesday as investors remained concerned that Greece is inching near to an exit from the euro-zone after week-long coalition talks failed to form a government. Moreover, European stocks were down amid deepening speculation that Greece will have to leave the Euro currency bloc. Back home, Reserve Bank’s efforts to curb the falling rupee failed to arrest the decline and it fell to an all-time low of 54.46, down 67 paise against its previous close. The currency was already under pressure as inflows from foreign institutional investors almost dried up due to the government’s inaction on policy reforms and its inability to contain the fiscal and current account deficits.

Earlier, domestic market made a gap down start tracking feeble global cues and Nifty breached its crucial 4,900 mark in the initial trade. Afterwards, the index traded in the tight band near its crucial 4,850 mark throughout the day’s trade. Shares of metal companies traded under pressure on the bourses after the LMEX, a gauge of six metals traded on the London Metal Exchange (LME), closed at 3,338.90 its lowest level since January on Greece woes, as investors continued to shy away from risky assets with the Greek political malaise threatening to plunge Europe into a deeper financial mess. Banking and financial space also faced the brunt of selling pressure. PNB, HDFC, ICICI Bank, Axis Bank and SBI fell between 2-4 percent on report that, the weighting of India’s biggest mortgage lender gets reduced in the MSCI indexes after its annual review. Market continued its choppy trade till end as news of fresh elections in Greece in June rattled global as well as domestic indices. Finally, Nifty ended the day’s trade with a massive cut of about 1.75 percent but, managed to hold its crucial 5,850 mark.

Meanwhile, all the sectoral indices on the NSE hammered badly and settled in the red; CNX Metal remained the major loser, losing 2.77% followed by CNX Auto down 2.51% and CNX Infra and CNX PSU Bank down by 1.83% each in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surges 6.41% and reached 23.71.

The India VIX witnessed an addition of 6.42% at 23.71 as compared to its previous close of at 22.28 on Tuesday.

The 50-share S&P CNX Nifty lost 84.55 points or 1.71% to settle at 4858.25.

Nifty May 2012 futures closed at 4,856.90 at a discount of 1.35 points over spot closing of 4,858.25, while Nifty June 2012 futures were at 4,873.50 at a premium of 15.25 points over spot closing. The near month May 2012 derivatives contract will expire on Thursday i.e. May 31, 2012. Nifty May futures saw a addition of 0.29 million (mn) units taking the total outstanding open interest (OI) to 20.88 mn units.

From the most active contract, Tata Motors May 2012 futures were at a premium of 2.55 point at 270.55 compared with spot closing of 268.00. The number of contracts traded was 30,191.

DLF May 2012 futures were at a premium of 1.35 point at 182.65 compared with spot closing of 181.30. The number of contracts traded was 8,625.

Tata Steel May 2012 futures were at a premium of 1.55 points at 401.30 compared with spot closing of 399.75. The number of contracts traded was 19,508.

Reliance Industries May 2012 futures were at a discount of 4.90 point at 677.40 compared with spot closing of 682.30. The number of contracts traded was 13,910.

ICICI Bank May 2012 futures were at a premium of 15.60 point at 780.95 compared with spot closing of 796.55. The number of contracts traded was 19,539.  

Among Nifty calls, 5200 SP from the May month expiry was the most active call with contraction of 0.28 million open interest.

Among Nifty puts, 4800 SP from the May month expiry was the most active put with contraction of 0.72 million open interest.

The maximum OI outstanding for Calls was at 5200 SP (7.42mn) and that for Puts was at 4800 SP (6.45mn).

The respective Support and Resistance levels are: Resistance 4881.32-- Pivot Point 4859.18--Support 4836.11.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.82 for May -month contract.

The top five scrips with highest PCR on OI were MPHASIS 5.00, Siemens 2.29, MRPL 2.00 Indus Ind Bank 2.00 and Asian Paint 1.52.

Among the most active underlying, Suzlon witnessed an addition of 6.17 million of Open Interest in the April month futures contract followed by IFCI which witnessed contraction of 0.32 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.02 million in the April month futures. Also, JP Associates witnessed contraction of 0.86 million in Open Interest in the April month contract. Finally, Unitech witnessed contraction of 3.04 million of Open Interest in the near month futures contract.