Analysts expect the Nifty to take support around the 3600 levels and the Sensex to test 12,600 on the downside.
The spot Nifty closed below the support level of 3900, while the July and August futures contracts ended the day with discounts of over 80 points each. The bears are not averse to going short and are willing to pay a huge premium (24 per cent on an annualized basis).
The Nifty July futures contracts added open interest of 4.4 million shares and the discount increased from 68 points to 82 points at close.
The market opened on a subdued note, traded in the positive territory for a brief period and witnessed relentless selling pressure thereafter. Investors dumped stocks on worries about high oil prices, inflation and political uncertainty.
The Sensex closed at 12,962 (down 500 points) and Nifty ended at 3,897 (weak by 144 points). The Nifty futures closed below the 3900 mark at 3815 and added OI of 1.81 per cent, while the Minifty futures added 11.26 per cent in open interest.
More From This Section
The BSE Realty Index was battered for the second consecutive session, losing 7 per cent, with HDIL sinking by 13 per cent. The BSE Bankex plunged by 6 per cent, with Bank of India falling 9 per cent. DLF, HDIL and Unitech saw fresh short build-up, while Sobha Developers witnessed unwinding of long positions.