sarwesh

Indian stocks are seen lower Tuesday with the discount on Nifty July futures rising to a high 50 points and weak cues from US and Asian markets. However, foreign funds buying in futures and a modest fall in crude oil prices may give some initial boost to the markets.

Tension between the US and Iran and political uncertainty over the nuclear deal back home raises near term concern. Iran is world's third biggest oil producing and exporting country. Any unpleasant development between the US and Iran may affect global oil supply as well as India's imports. Recently, India signed an agreement with Iran on import of LNG and crude oil.

Monday, despite positive global cues, Indian markets failed to sustain gains. National Stock Exchange's 50-share Nifty closed at 4030, up 14 points from Friday, but off 84 points from the day’s high. Crude oil has also cooled off from the $146 per barrel level of to sub $143 level. News suggesting that Samajvadi Party has demanded windfall tax on private oil companies and an immediate ban on export of petro goods by these companies dragged the shares of private oil players such as Reliance Industries, Reliance Petroleum and Cairn India in late trade.

Except for oil & gas and healthcare indices, which lost 2 per cent and 0.4 per cent respectively, all sectoral indices ended in the green. FMCG index was the top gainer with a gain of 2.8 per cent, followed by IT and auto indices, which gained 2.6 per cent and 2.2 per cent respectively.

Nifty July contract ended at a 50 points discount, widening from 36 points on Friday. The contract price was unchanged from previous day while open interest added 3.22 lakh shares. Rising open interest coupled with widening discount signifies short build up in the contract. The cost of carry was negative at (-18.68).

Optimistic players have bought calls at 4000 levels. Bears have tightened their grip by writing calls from strikes 4100 to 4500. However, a very thin line was observed between put writing and put buying from strikes 4000 to 3700. The options data suggests a high amount of bearishness in near term.

Foreign institutional investors' net bought futures worth Rs 906 crore while they net sold options worth Rs 39 crore. Nifty put-call ratio of open interest rose to 1.19 from 1.03 on Friday as players bought puts at immediate levels.
Meanwhile, stocks fell in US on Monday, as concern that banks will be saddled with more losses from mortgage debt erased the biggest gain in three weeks. Crude oil eased to $141 a barrel from record high of $146 the previous day