Bears hit back with a vengeance; Nifty down 2.20%

Bears struck back with a bang on Wednesday as investor jitters grew on domestic concerns about high inflation, slowing growth and a vulnerable rupee. Moreover, gloomy global economy cues added to the depressed outlook as US markets slipped overnight on concerns about the worsening debt crisis in Europe where rising yields suggested the outlook continues to deteriorate where stocks have been tied to the European credit market’s volatility. On the same time the dour Chinese PMI data rattled Asian markets and major Asian equity indices snapped the day’s trade with a cut of 1-3 percent. However, the Indian currency pulled back today on suspected central bank intervention and was trading at 52.13 to the dollar as against 52.30, but the near-term outlook remained bearish for the currency.

Earlier, S&P CNX Nifty resumed its southward journey on negative global cues after witnessing mild pull back in previous session. The index extended its downfall and breached its crucial 4,750 mark as heavy selling witnessed ahead of monthly expiry in the derivatives segment and global growth jitters. Sentiments remained subdued as PSU oil marketing companies BPCL, HPCL and IOC tumbled by 2-5 percent in the trade as crude oil prices surged. Meanwhile, the Reserve Bank of India (RBI) has allowed foreign investors to invest in debt instruments floated by infrastructure debt funds (IDF) set up as non-banking financial companies (NBFCs) or mutual funds (MFs). The debt instrument would include foreign currency and rupee bonds. In the noon trade, market witnessed steep fall and hit its 2-year lows breaching the psychological 4,650 mark as European counters opened on a weak note. NSE CNX metal index dropped 1.93 percent to 2,659 as China - a key consumer of aluminium and copper - reported weak economic data while, Software shares dropped on euro zone concerns with the CNX IT index declining 2.40 percent at 5,843.40. However, in the last leg of trade, Nifty made some recovery following mild pullback  in European markets and managed to close the session a tad over its crucial 4,700 mark but, with a huge cut of over two percentage point.

On the global front, the US markets continued their decline on Tuesday on concern of weakening domestic economy and deepening European debt crisis, while all the Asian share markets ended with sizable losses on Wednesday after poor manufacturing data from China added to worries about global growth. However, European counters were trading flat after a negative opening. Back home, all the sectoral indices on the NSE were hammered badly with CNX Infra losing the most, ending with a cut of over three percent followed by Bank Nifty down by 2.47%, CNX IT down by 2.40% and CNX Service down by 2.39%. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 12.18% and reached 30.68.

The India VIX witnessed an addition of 12.18% at 30.68 as compared to its previous close of 27.35 on Tuesday

The 50-share S&P CNX Nifty offloaded 105.90 or 2.20% to settle at 4,706.45 .

Nifty November 2011 futures closed at 4,703.80 at a discount of 2.65 points over spot closing of 4,706.45, while Nifty December 2011 futures were at 4,723.00 at a premium of 16.55 points over spot closing. The near month November 2011 derivatives contract expires on Thursday, November 24, 2011. Nifty November futures saw addition of 11.22% or 2.29 million (mn) units taking the total outstanding open interest (OI) to 22.72 mn units.

From the most active contract by contract value, SBI’s November 2011 futures were at a discount of 2.05 point at 1656.00 compared with spot closing of 1658.05. The number of contracts traded was 39,231.

ICICI Bank November 2011 futures were at a premium of 0.10 point at 730.10 compared with spot closing of 730.00. The number of contracts traded was 35,618.

RIL November 2011 futures were at a discount of 2.00 points at 773.00 compared with spot closing of 775.00. The number of contracts traded was 27,601.

SBI December 2011 futures were at a discount of 13.05 point at 1645.00 compared with spot closing of 1658.05. The number of contracts traded was 25,695.

L&T November 2011 futures were at a discount of 2.50 point at 1188.00 compared with spot closing of 1190.50. The number of contracts traded was 16,501.

Among Nifty calls, 4700 SP from the November month expiry was the most active call with addition of 2.53 million or 231.49%.

Among Nifty puts, 4700 SP from the November month expiry was the most active put with a contraction of 0.48 million or 7.56%.

The maximum Call OI outstanding for Calls was at 4700 SP (3.62 mn) and that for Puts was at 4700 SP (5.86 mn).

The respective Support and Resistance levels are: Resistance 4776.98-- Pivot Point 4708.96-- Support 4638.43.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.56 for November -month contract.

The top five scrips with highest PCR on OI were Grasim Industries 4.80, Kotak Bank 4.00, Syndicate Bank 3.22, Ruchi Soya 2.75 and Patni 2.38.

Among most active underlying, SBI witnessed a contraction of 15.05% of Open Interest (OI) in the November month futures contract followed by ICICI Bank witnessed an addition of 3.37% of Open Interest (OI) in the near month contract. Meanwhile RIL witnessed an addition of 0.34% in the November month futures. Also, Tata Motors witnessed an addition of 12.15% in Open Interest (OI) in the November month contract followed by Tata Steel witnessed a contraction of 1.44% in Open Interest (OI) in the November month contract.