Nifty Aug premium tapers as investors baffled by weak cues

MUMBAI: In extremely choppy trade, Indian stocks ended lower Monday led by weak cues from global markets. National Stock Exchanges' 50-share Nifty fell by 0.41 per cent to end at 4395.

In F&O, Nifty August ended at 5 points premium against 19 points Friday. The contract price slipped 0.74 per cent while open interest added 18 lakh shares. Cost of carry was positive, indicating long build up at lower levels.

Bears have written calls from strikes 4400 to 4600 and have bought 4400 and 4500 puts. Bulls have bought calls at higher level and written puts at lower level, putting Nifty in a range of 4300-4500 for near term.

“If global cues remain negative, bears will take control and may drag the Nifty to 4100 levels. Any improvement on global front can push Nifty to 4500-4550 levels. Market will remain volatile until there is a strong trigger either side. Investors should not bet aggressively till volatility subsides," said T Venktesh, fund manager at Arnava Global.

“Also, Moody’s is negative on the Indian growth story and has said that fiscal deficit may widen if oil stays at current level (of $124-125). At this point one should buy in-the-money puts at 4500 strikes,” Venktesh added.

Capital goods, power and oil & gas sector dragged the most today while consumer durables, metal and healthcare stocks gained.

Reliance Industries August futures fell 2.34 per cent while open interest added 6.6 lakh shares. Reliance Natural Resources gained 1.46 per cent and Reliance Petroleum jumped 2.82 per cent.

Tata Steel advanced 1.23 per cent and added 5 lakh shares in open interest. SAIL climbed 4.37 per cent and open interest added 23.23 lakh shares. Larsen & Toubro slipped 1.57 per cent while GMR Infra rose 3.11 per cent.

ICICI Bank dropped 1.19 per cent and SBI fell 0.96 per cent. HDIL gained 3.83 per cent on short covering while DLF skid 2.45 per cent.

Total F&O turnover on NSE was Rs 43,364 crore, down 11 per cent from Friday.

“FOMC meeting tomorrow and the decision on interest rates by US Fed Chief Bernanke will influence US and global markets in general. The market is faced with big challenges like rising interest rates and high inflation. Volatility will continue for some more time, till clarity emerges on all these fronts," said Praveen Kumar, analyst with DBM Fund Management.

Meanwhile, European stocks fell for a third day and US futures retreated as concern that banks' earnings won't recover anytime soon overshadowed gains by energy companies. Asian shares also declined.
thanks to :- economictimes.indiatimes.com