Nifty erases most of intra-day gains; ends flat below 6700 level

The fifty stock index -- Nifty -- snapped 5-day losing streak and rallied a bit intraday but could not hold all gains till the end. After much of a struggle to hold 6700, the Nifty closed below it marginally.  Healthy buying was observed in Oil & Gas, Metal and Capital Goods counters, while selling pressure was seen in Teck, IT and Realty counters. The market sentiment was supported by data showing that foreign funds remained net buyers of Indian stocks on Friday. On the global front, most of Asian markets ended lower after a private survey indicated that China's manufacturing data in April came in lower than expected. HSBC's April PMI for China's manufacturing sector slipped to 48.1 against expectations of 48.3.

In the F&O segment, the open interest (total of unsquared positions) was lower than usual, which means people have turned cautious prior to the election results. However, this week and coming week, Nifty futures may witness high volatility on the back of news flows and traders are advised to maintain proper stop-loss mechanism for trading, while investors should hedge long portfolio with options strategies. Moreover, active traders can utilise the expected volatility by making various option strategies with risk and reward known in advance. In the index option segment, maximum OI continues to be seen in the 7000-6800 calls and 6500-6400 puts indicating this is the trading range expectation. In today's session, the 6700, 6900 and 7100 Call strikes saw addition of 2.26, 2.11 and 2.77 lakh shares, respectively. On the other hand, 6700, 6600 and 6400 Put strikes saw addition of 4.46, 0.96 and 5.36 lakh shares, respectively.

The top gainers from the F&O scrips were Century Textiles & Industries, Canara Bank and Hindalco Industries. The top losers were Just Dial, Reliance Communications and Glenmark Pharmaceuticals. Among the top gainers, Canara Bank futures ended the trade up by 7.11 % after its net non-performing loans fell to 1.98 during the January-March quarter from 2.39% in the previous quarter. While Among the top losers, Reliance Communications ended the trade with a cut of 4% after its consolidated net profit dropped more than expected in the January-March quarter.

Most of the sectoral indices on the NSE were settled in the green, CNX Metal up by 1.35%, CNX Energy up by 1.22%, CNX PSU Bank up by 0.71%, CNX FMCG up by 0.57%, Bank Nifty up by 0.30% and CNX Auto up by 0.23% while CNX IT down by 1.03%, CNX Pharma down by 0.96%, CNX Media down by 0.89%, CNX Realty down by 0.75% and CNX Finance down by 0.50% were the losers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.42% and reached 34.18. The 50-share CNX Nifty increased by 4.55 points or 0.07% to settle at 6,699.35.

Nifty May 2014 futures closed at 6,735.50 on Monday at a premium of 36.15 points over spot closing of 6,699.35, while Nifty June 2014 futures ended at 6,753.35 at a premium of 54.00 points over spot closing. Nifty May futures saw an addition of 0.28 million (mn) units, taking the total outstanding open interest (OI) to 13.15 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, Aurobindo Pharma May 2014 futures were at a premium of 4.40 points at 597.00 compared with spot closing of 592.60. The number of contracts traded was 12,515.

Tata Steel May 2014 futures traded at a premium of 3.15 points at 400.10 compared with spot closing of 396.95. The number of contracts traded was 17,504.

Reliance Industries May 2014 futures were at a discount of 0.55 points at 943.85 compared with spot closing of 944.40. The number of contracts traded was 20,326.

Canara Bank May 2014 futures traded at a premium of 1.60 points at 306.70 compared with spot closing of 305.10. The number of contracts traded was 27,586.

Adani Enterprises May 2014 futures traded at a premium of 3.70 points at 429.20 compared with spot closing of 425.50. The number of contracts traded was 12,895.

Among Nifty calls, 7000 SP from the May month expiry was the most active call with marginal addition of open interest.

Among Nifty puts, 6500 SP from the May month expiry was the most active put with marginal contraction of open interest.

The maximum OI outstanding for Calls was at 7,000 SP (4.07 mn) and that for Puts was at 6,500 SP (4.09 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6733.45--- Pivot Point 6706.95 --- Support --- 6672.85.

The Nifty Put Call Ratio (PCR) finally stood at 1.12 for May month contract. The top five scrips with highest PCR on OI were GAIL 1.73, UPL 1.21, Ultra Cement Co 1.13, REC 1.13, and Tech Mahindra 1.00.

Among most active underlying, United Spirits witnessed contraction of 0.02 million  of Open Interest in the May month futures contract, followed by Reliance Industries witnessing contraction of 0.21 million of Open Interest in the May  month contract; while HDFC Bank witnessed an addition of 0.74 million of Open Interest in the May month futures contract, State Bank of India witnessed an addition of 0.10 million of Open Interest in the May month contract and finally, ICICI Bank witnessed  an addition  of 0.38  million  of Open Interest in the May month's future contract.