Weak rupee, global cues drag Nifty below 4,850 mark

Sentiments continue to remain bearish on Wednesday and S&P CNX Nifty snapped the day’s trade with a cut of over half a percent, breaching its crucial 4,850 mark after the Indian rupee fell over a percentage point to hit a record low of 56.18 against the dollar while, weak opening in European counters too dampened the sentiments. Moreover global cues too remained subdued as all the Asian markets ended  in the negative terrain while, Europe’s top shares fell early on Wednesday, reversing a two-session rally and tracking losses overnight on Wall Street as caution prevailed ahead of an EU meeting.

The Indian equity market made a dismal opening breaching its crucial 4,900 mark led by weak global cues. Afterwards, the market lost some more ground and headed near its crucial 4,800 mark due to freefall of Indian currency, which dampened the trading sentiments. The Indian rupee touched a fresh record low of 56.18 to the dollar today, down by 79 paise from previous close of 55.39 a dollar. However, this helped IT stocks to gain momentum, TCS, Infosys, Wipro edged higher in the trade. Meanwhile, telecom stocks fell on worries of intensifying competition after Idea Cellular on May 22, 2012, announced upto 70% price reduction on its 3G services. Moreover, Metal stocks tumbled after the World Bank said global commodity prices could drop unexpectedly in the event of a faster-than-expected slowdown in China. But, in the second half of day’s trade market recouped more than half of losses on hopes that the government may consider hike in diesel and petrol prices by this weekend. The hike will help the government to move on the fiscal deficit aspect as well as the current account deficit. However, the recovery was unable to take market in the green terrain as weak opening in European counters continued to vanish the domestic sentiments. Finally Nifty ended the day’s trade with a cut of half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in the negative territory with CNX Infra losing the most, down by 1.46% followed by CNX Realty down by 1.06% and CNX Metal down by 0.89% while, CNX IT up 0.17% remained the lone gainer on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 1.96% and reached 24.39.

The India VIX witnessed an addition of 2.74% at 27.13 as compared to its previous close of at 24.39 on Tuesday.

The 50-share S&P CNX Nifty lost 24.85 points or 0.51% to settle at 4835.65.Nifty May 2012 futures closed at 4,814.55 at a discount of 21.10 points over spot closing of 4,835.65, while Nifty June 2012 futures were at 4,829.50 at a discount of 6.15 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 contraction of 0.49 million (mn) units taking the total outstanding open interest (OI) to 20.47 mn units.

From the most active contract, Tata Motors May 2012 futures were at a premium of 1.10 point at 262.60 compared with spot closing of 261.50. The number of contracts traded was 15,611.

BHEL May 2012 futures were at a premium of 0.15 point at 208.40 compared with spot closing of 208.25. The number of contracts traded was 15,477.

Tata Steel May 2012 futures were at a premium of 0.50 points at 394.90 compared with spot closing of 394.40. The number of contracts traded was 12,790.

ICICI Bank May 2012 futures were at a discount of 13.05 point at 778.40 compared with spot closing of 791.45. The number of contracts traded was 17,404.

Reliance Industries May 2012 futures were at a discount of 9.90 point at 679.10 compared with spot closing of 689.00. The number of contracts traded was 9,715.

Among Nifty calls, 5000 SP from the May month expiry was the most active call with contraction of marginal in open interest.

Among Nifty puts, 4700 SP from the May month expiry was the most active put with an addition of 1.48 million open interest.

The maximum OI outstanding for Calls was at 5000 SP (7.12mn) and that for Puts was at 4700 SP (9.17mn).

The respective Support and Resistance levels are: Resistance 4858.28-- Pivot Point 4831.11--Support 4808.48.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.87 for May -month contract.

The top five scrips with highest PCR on OI were ABGShip 44.00, WelCorp 6.63, Tata Comm 3.00, Asian Paint 1.81, and MPHASIS 1.50

Among the most active underlying, IFCI witnessed contraction of 12.70 million of Open Interest in the April month futures contract followed by RCOM which witnessed contraction of 0.26 million of Open Interest in the near month contract. Meanwhile, JP Associates witnessed an addition of 1.62 million in the April month futures. Also, Tata Motors witnessed contraction of 2.65 million in Open Interest in the April month contract. Finally, Hindalco witnessed contraction of 1.04 million of Open Interest in the near month futures contract.