Final hour profit booking prompts Nifty to close below 6,800 mark

After rallying over 100 points in the previous session, Nifty opened in the green on Thursday, albeit on a cautious note and traded in a small range for the major part of the day. Some buying was witnessed by funds and retail investors as sentiments were positive post the overnight rally in US stocks after minutes from the Federal Reserve's policy meeting eased concerns about the central bank raising interest rates sooner than anticipated. Market traded range bound till late afternoon trade but witnessed a drastic fall in last leg of trade tracking downtick in European counterparts. The index ended flat as profit-taking hit blue chips such as Infosys on caution ahead of the release of quarterly earnings and inflation data next week. 

Investor preference has shifted from classic defensive stocks like fast moving consumer goods (FMCG), healthcare/ Pharma and information technology (IT) to high beta and policy reform oriented sectors like capital goods and banking. The top gainers from the F&O segment were Adani Enterprises, Reliance Infrastructure and Crompton Greaves. The top losers were Dr. Reddy's Laboratories, Sun Pharmaceuticals and Lupin.

In the index option segment, maximum OI (open interest) is seen in the 6900-7000 calls and 6700-6600 puts indicating the expected trading range between 6600-7000. Moreover, India VIX - the gauge of underlying volatility in the market - has risen in the last two weeks as traders turned cautious after the benchmark indices continued to touch new highs. Rising VIX levels show traders are buying more options contracts as insurance against declines in the market.

Most of the sectoral indices on the NSE were settled in the green, CNX Realty remained the major gainer, up 1.52% followed by CNX PSU Bank up 1.13%, CNX Energy up by 1.04%, CNX Auto up by 0.48%, CNX Finance up by 0.33%, CNX Metal up by 0.32%, CNX Media up by 0.22% and Bank Nifty up by 0.09% while CNX Pharma down by 1.89% followed by CNX IT down 1.05% and CNX Pharma down 0.46% were the only losers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility was up by 6.71% and reached 28.7175. The 50-share CNX Nifty increased by 0.20 points to settle at 6,796.40.

Nifty April 2014 futures closed at 6,825.05 on Thursday at a premium of 28.65 points over spot closing of 6,796.40, while Nifty May 2014 futures ended at 6,874.20 at a premium of 77.80 points over spot closing. Nifty April futures saw contraction of 0.92 million (mn) units, taking the total outstanding open interest (OI) to 16.50 mn units. The near month April 2014 derivatives contract will expire on April 24, 2014.

From the most active contracts, DLF April 2014 futures were at a premium of 3.15 points at 179.45 compared with spot closing of 176.30. The number of contracts traded was 34,181.

Reliance Capital April 2014 futures were at a premium of 4.45 points at 364.05 compared with spot closing of 359.60. The number of contracts traded was 19,868.

Tata Steel April 2014 futures traded at a premium of 3.75 points at 418.90 compared with spot closing of 415.15. The number of contracts traded was 17,883.

Reliance Industries April 2014 futures traded at a premium of 3.75 points at 972.75 compared with spot closing of 969.00. The number of contracts traded was 19,148.

Sun Pharma April 2014 futures traded at a premium of 6.45 points at 619.45 compared with spot closing of 613.00. The number of contracts traded was 18,325.

Among Nifty calls, 6,900 SP from the April month expiry was the most active call with addition of 0.64 million open interest.

Among Nifty puts, 6,800 SP from the April month expiry was the most active put with addition of 1.26 million open interest.

The maximum OI outstanding for Calls was at 6,900 SP (3.93 mn) and that for Puts was at 6,700 SP (5.84 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6817.87-- Pivot Point 6797.58 - Support -- 6776.12.

The Nifty Put Call Ratio (PCR) finally stood at 1.51 for April month contract. The top five scrips with highest PCR on OI were HDFC 1.91, HDIL 1.27, PNB 1.14, Century Textile 1.13 and Ambuja Cements 1.03.

Among most active underlying, Adani Enterprises witnessed addition of 0.97 million of Open Interest in the April month futures contract, followed by SBI witnessing a contraction of 0.02 million of Open Interest in the April month contract; DLF witnessed an addition of 6.5 million of Open Interest in the April month futures. Rel Infra witnessed a contraction of 0.41 million of Open Interest in the April month contract and Tata Steel witnessed a contraction of 0.12 million of Open Interest in the expiring April month's future contract.