Nifty declines for second consecutive session; closes below 6750

After opening stronger and slumping almost hundred points from its high levels, the Nifty closed below the 6750 mark with a cut of about half a percent, extending its downward trend for second consecutive day. Markets had started the day's proceedings on a positive note, with Infosys heralding the result season with a decent set of numbers. However, the gains on the index were short-lived as weakness on the financial counters negated the gains on the IT stocks. Weakness in global markets on tensions between Ukraine and Russia also hurt sentiments. Further, shares related to metal and mining space edged lower as China’s broadest measure of new credit fell 19% in March from a year earlier and money supply grew at the slowest pace since 2001. Meanwhile, the headline WPI inflation for March 2014 has increased negatively by coming in at 5.7 per cent higher than market expectations of 5.3 per cent and inflation of 4.68 per cent in February 2014.

In today's session traders added 7000 and 6900 calls and exited 6700 and 6600 puts as they were expecting a huge up move in Nifty. In the stock option segment, many traders and hedgers have added position in Infosys after it posted better-than-expected Q4 results. Many traders add their position in 3400 and 3500 calls on hopes of further rally in Infosys. However, some hedgers have built their potion in 3300 and 3200 puts.

The top gainers from the F&O segment were United Spirits, Tata Communications and TCS. The top losers were Just Dial, DLF and Bank of India.

Moreover, India VIX - the gauge of underlying volatility in the market - has continued its southward journey, shows that 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 red, CNX IT remained the major gainer, up 1.93% followed by CNX FMCG up 0.23% while CNX Realty down by 3.01% followed by CNX Metal down 2.76% CNX Finance down by 2.23%, CNX PSU Bank down by 2.21%, Bank Nifty down by 2.03%, CNX Media down by 1.56%, CNX Auto down by 1.10%, CNX Pharma down 0.80% and CNX Energy down by 0.36%,  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 9.22% and reached 31.8750. The 50-share CNX Nifty declined by 43.20 points or 0.64% to settle at 6,733.10.

Nifty April 2014 futures closed at 6,753.95 on Tuesday at a premium of 20.85 points over spot closing of 6,733.10, while Nifty May 2014 futures ended at 6,800.40 at a premium of 67.30 points over spot closing. Nifty April futures saw contraction of 0.76 million (mn) units, taking the total outstanding open interest (OI) to 15.35 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 1.50 points at 166.50 compared with spot closing of 165.00. The number of contracts traded was 16,229.

Tata Motors April 2014 futures were at a discount of 1.00 points at 414.00 compared with spot closing of 415.00. The number of contracts traded was 12,431.

Tata Steel April 2014 futures traded at a premium of 1.35 points at 409.90 compared with spot closing of 408.55. The number of contracts traded was 12,537.

Reliance Industries April 2014 futures traded at a premium of 7.95 points at 953.75 compared with spot closing of 945.80. The number of contracts traded was 15,158.

ICICI Bank April 2014 futures traded at a premium of 4.50 points at 1223.00 compared with spot closing of 1218.50. The number of contracts traded was 17,406.

Among Nifty calls, 6,800 SP from the April month expiry was the most active call with addition of 1.10 million open interest. Among Nifty puts, 6800 SP from the April month expiry was the most active put with addition of 0.55 million open interest.

The maximum OI outstanding for Calls was at 6,800 SP (4.71mn) and that for Puts was at 6,700 SP (5.41 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6793.75-- Pivot Point 6752.75 - Support - 6692.10.

The Nifty Put Call Ratio (PCR) finally stood at 1.25 for April month contract. The top five scrips with highest PCR on OI were Ambuja Cements 1.32, Century Textile 1.22, HDFC 1.15, HDIL 1.10 and MRF 1.00.

Among most active underlying, Infy witnessed contraction of 0.30 million of Open Interest in the April month futures contract, followed by MCDOWELL-N witnessing contraction of 0.68 million of Open Interest in the April month contract; TCS witnessed a contraction of 0.14 million of Open Interest in the April month futures contract. SBI witnessed an addition of 0.03 million of Open Interest in the April month contract and Adani Enterprises witnessed an addition of 0.48 million of Open Interest in the expiring April month's future contract.