Nifty trims losses in final deals to close well above 6800

Nifty opening on a positive note and trading in a narrow 30-point range for most part of the day ended the session marginally in the red as investors remained cautious ahead of the F&O expiry tomorrow. Healthy buying was observed in capital goods, oil and gas, consumer durables, healthcare and bank sectors, while selling pressure was seen in metal, automobile, information technology (IT), fast moving consumer goods (FMCG) and technology, entertainment and media (TECK) sectors. Sentiments weakened somewhat as the rupee depreciated to its lowest level against the dollar since March 21 on dollar demand from importers, particularly oil firms, as well as weaker regional currencies.

In the index option segment, maximum OI continues to be seen in the 6700-6800 calls and 6700-6600 puts indicating this is the trading range expectation. Traders have added their position in 6850 and 6900 calls on expectations of an up-move in index. Meanwhile, some traders rolled over positions in the futures & options (F&O) segment from the near month April 2014 series to May 2014 series. The April 2014 F&O contracts expire tomorrow as the stock market remains closed on April 24, on account of voting in Mumbai.

Moreover, India VIX - the gauge of underlying volatility in the market - has declined as traders turned cautious ahead of the F&O expiry tomorrow. Falling India VIX indicates that traders have slowed down buying options contracts. The top gainers from the F&O Securities were BPCL, M&M Financial Services and Unitech. The top losers were Apollo Tyres, Sesa Sterlite and MRF.

Most of the sectoral indices on the NSE were settled in the red, CNX Energy remained the major gainer, up 0.81% followed by CNX Finance up 0.30%, CNX Pharma up by 0.27% and Bank Nifty up by 0.22%,  while CNX Media down by 1.83% followed by CNX PSU Bank down 1.18% CNX Metal down by 0.76%, CNX IT down by 0.55%, CNX Auto down by 0.55%, CNX FMCG down 0.45% and CNX Realty down by 0.05%,  were the only losers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility declined by 2.99% and reached 33.3550. The 50-share CNX Nifty lost 2.30 points or 0.03% to settle at 6,815.35.

Nifty April 2014 futures closed at 6,829.60 on Tuesday at a premium of 14.25 points over spot closing of 6,815.35, while Nifty May 2014 futures ended at 6,876.70 at a premium of 61.35 points over spot closing. Nifty April futures saw contraction of 1.85 million (mn) units, taking the total outstanding open interest (OI) to 12.36 mn units. The near month April 2014 derivatives contract will expire on April 23, 2014.

From the most active contracts, DLF April 2014 futures were at a premium of 0.75 points at 157.55 compared with spot closing of 156.80. The number of contracts traded was 17,279.

HDFC Bank April 2014 futures traded at a discount of 0.30 points at 728.40 compared with spot closing of 728.70. The number of contracts traded was 26,949.

Reliance Industries April 2014 futures traded at a premium of 3.80 points at 970.75 compared with spot closing of 966.95. The number of contracts traded was 46,311.

ICICI Bank April 2014 futures traded at a premium of 1.95 points at 1290.95 compared with spot closing of 1289.00. The number of contracts traded was 27,687.

L&T April 2014 futures were at a premium of 1.60 points at 1346.55 compared with spot closing of 1344.95. The number of contracts traded was 16,391.Among Nifty calls, 6,850 SP from the April month expiry was the most active call with addition of 1.25 million open interest. Among Nifty puts, 6800 SP from the April month expiry was the most active put with addition of 2.25 million open interest.

The maximum OI outstanding for Calls was at 6,900 SP (5.73 mn) and that for Puts was at 6,800 SP (6.82 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6833.48 --- Pivot Point 6819.00 --- Support --- 6801.73.

The Nifty Put Call Ratio (PCR) finally stood at 1.56 for April month contract. The top five scrips with highest PCR on OI were Ambuja Cements 1.42, BPCL 1.20, Hindalco 1.17, PNB 1.12, BoB 1.03 and Tata Steel 1.02.

Among most active underlying, Reliance Industries witnessed contraction of 3.41 million of Open Interest in the April month futures contract, followed by L&T witnessing contraction of 0.93 million of Open Interest in the April month contract; SBI witnessed a contraction of 0.84 million of Open Interest in the April month futures contract. HDFC Bank witnessed a contraction of 5.09 million of Open Interest in the April month contract and Infy witnessed a contraction of 0.63 million of Open Interest in the expiring April month's future contract.