Infosys guidance shocker drags Nifty below 5,250 mark

Pressurized by Infosys guidance shocker combined with bleak global cues, fifty stock index -- Nifty -- continued its southbound journey for second straight day. The sentiments remained dampen throughout the day’s trade and the benchmark lost over 70 points, to end below crucial 5,250 mark, its worst single-day fall in nearly seven weeks after IT major Infosys’ sharp cut in earnings outlook soured market sentiment prompting investors to shrug off even better-than-expected factory output growth in May. Global cues too remained lackluster as most of the Asian peers ended lower after the latest FOMC minutes didn’t provide any cues for further quantitative easing. Also, there were concerns on the global economy slowing as Australian employers cut more than estimated jobs. Moreover, European counters too fell in the early trade on concerns that the global recovery is faltering.

Back home, the Indian equity market made a gap-down start with Nifty breaching its crucial 5,300 bastion on the back of disappointing results by IT bellwether Infosys and weak global cues. The company’s Q1 net profit and revenues fell short of consensus estimates. The company has posted a rise of 33.25% in its net profit after exceptional item at Rs 2,204 crore for the quarter under review. In addition, Infosys expects a growth of at least 5% in revenues (in dollar terms) of $7.343 billion whereas market had expected around 6-8% and the company itself had forecasted 8-10% growth in April. On the economic data front, industrial output data for May has improved to 2.4%, but the April output revised to negative 0.9% from 0.1% (provisional) earlier that also dampened the mood. In the noon trade, market lost some more ground and touched its intraday low breaching its important 5,250 level as sentiments got hammered as buying was witnessed in banking stocks which felt the pressure after May industrial output data dimmed hopes that Reserve Bank of India (RBI) would slash key policy rates in its upcoming monetary policy review on July 31. Moreover, telecom stocks also got bludgeoned and declined for the second straight day ahead of a meeting of the empowered group of ministers on spectrum pricing, which is scheduled later today, under its new head -- P Chidambaram. No sign of recovery was witnesses throughout the day’s trade and Nifty, finally, snapped the session below its crucial 5,250 mark with a cut of over a percentage point.

Meanwhile, most of the sectoral indices on the NSE settled in the negative territory with CNX IT losing the most, ending with a cut of 2.13% followed by CNX Metal down by 1.15% and CNX Auto down by 0.99% while, CNX Realty up 0.97% remained the lone gainer on NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 1.74% and reached 18.71.

The India VIX witnessed contraction of 1.74% at 18.71 as compared to its previous close of at 18.39 on Wednesday.

The 50-share S&P CNX Nifty lost 71.05 points or 1.34% to settle at 5,235.25.

Nifty July 2012 futures closed at 5,251.40 at a premium of 16.15 points over spot closing of 5,235.25, while Nifty August 2012 futures were at 5277.35 at a premium of 42.10 points over spot closing. The near month July 2012 derivatives contract will expire on Thursday i.e. July 26, 2012. Nifty July futures saw an addition of 0.01 million (mn) units taking the total outstanding open interest (OI) to 23.26 mn units.

From the most active contract, JP Associates July 2012 futures were at a premium of 0.75 point at 78.90 compared with spot closing of 78.15. The number of contracts traded was 11,241.

Tata Motors July 2012 futures were at a discount of 2.30 point at 233.95 compared with spot closing of 236.25. The number of contracts traded was 10,656.

Tata Steel July 2012 futures were at a discount of 9.25 point at 418.05 compared with spot closing of 427.30. The number of contracts traded was 8,781.

ICICI Bank July 2012 futures were at a premium of 5.65 points at 931.15 compared with spot closing of 925.50. The number of contracts traded was 17,609.

SBI July 2012 futures were at a discount of 16.65 point at 2,200.35 compared with spot closing of 2,217.00. The number of contracts traded was 32,363. 

Among Nifty calls, 5400 SP from the July month expiry was the most active call with an addition of 0.43 million open interest.

Among Nifty puts, 5000 SP from the July month expiry was the most active put with an addition of 0.42 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (8.38mn) and that for Puts was at 5000 SP (8.50mn).

The respective Support and Resistance levels are: Resistance 5258.76 -- Pivot Point 5238.23--Support 5214.71.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.37 for July -month contract.

The top five scrips with highest PCR on OI were AIL 4.00, DIVISLAB 2.00, MRF 2.00, Sun Pharma 1.54, and Grasim 1.12.Among the most active underlying, IFCI witnessed contraction of 1.58 million of Open Interest in the July month futures contract followed by LITL which witnessed contraction of 2.59 million of Open Interest in the near month contract. Meanwhile, Unitech witnessed an addition of 3.72 million in the July month futures. Also, RCOM witnessed an addition of 0.04 million in Open Interest in the July month contract. Finally, Jaiprakash Associates witnessed an addition of 2.91million of Open Interest in the near month futures contract.