Nifty snaps two days winning streak; ends below 6,700 mark

Erasing the previous session’s gains, CNX Nifty ended in red, below the crucial 6,700 level with a cut of close to a percent on heavy selling in IT, Teck, Metal and Realty sector stocks. Weakness in global markets too weighed on the sentiments as most of the Asian counter parts shut shop in red post an overnight drop in U.S. tech stocks and the deepening Ukraine crisis hurt global risk appetite. Nifty opened with a small downside gap and traded in a small range near its crucial 6,700 mark till morning trade, but witnessed a drastic fall in afternoon trade tracking downtick in European counterparts. IT stocks came under pressure after global investment bank UBS downgraded the bellwether Infosys to 'sell' citing the longer-than-expected turnaround time at the IT outsourcer, while stronger rupee added to the pressure faced by IT stocks.  Moreover, Metal stocks fell after latest data showed services index in China from HSBC Holdings Plc and Markit Economics dropped in April from March.

It seemed that this week and coming week, Nifty Futures and Options may witness high volatility on the back of news flows and traders were advised to maintain proper stop-loss mechanism for trading, while investors should hedge long portfolio with options strategies. In the index option segment, maximum OI concentration was seen in a wider range at 7000 strike price for call option, indicating it as resistance, and for put option, it is seen at 6500 strike price, suggesting this level as support for the market. In today's session, the 6900, 7000 and 7100 Call strikes saw addition of 3.24, 7.08 and 5.49 lakh shares, respectively. On the other hand, 6700 and 6000 Put strikes saw addition of 2.13 and 3.83 lakh shares, respectively. Meanwhile, some traders exited from 6600 and 6500 puts on the back of profit booking.

The top gainers from the F&O Securities were IRB Infrastructure Developers, CESC and Arvind. The top losers were Allahabad Bank, Syndicate Bank and HCL Technologies. Among the top gainers, IRB Infrastructure Developers futures ended the trade up by 6.85 % after it received a letter of award from National Highways Authority of India for a road project in Haryana. While Among the top losers, Syndicate Bank ended the trade with a cut of 7.62% after reporting a 30.90% decline in net profit to Rs 409.30 crore for the quarter ended March 31, 2014.

All the sectoral indices on the NSE were settled in the red, CNX IT down by 2.54%, CNX Realty down by 1.35%, CNX Finance down by 0.84%, CNX Metal down by 0.82%, CNX Auto down by 0.65%, CNX Media down by 0.64%, CNX FMCG down by 0.37%, CNX Pharma down by 0.21%, Bank Nifty down by 0.21%, CNX Energy down by 0.16% and CNX PSU Bank down by 0.09%.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.03% and reached 33.61. The 50-share CNX Nifty decreased by 62.75 points or 0.93% to settle at 6,652.55.

Nifty May 2014 futures closed at 6,681.65 on Wednesday at a premium of 29.10 points over spot closing of 6,652.55, while Nifty June 2014 futures ended at 6,701.35 at a premium of 48.80 points over spot closing. Nifty May futures saw an addition of 0.94 million (mn) units, taking the total outstanding open interest (OI) to 13.84 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, Allahabad Bank May 2014 futures traded at a premium of 0.70 points at 95.40 compared with spot closing of 94.70. The number of contracts traded was 14,636.

Reliance Industries May 2014 futures were at a discount of 2.25 points at 956.65 compared with spot closing of 958.90. The number of contracts traded was 17,937.

Lupin May 2014 futures traded at a premium of 12.80 points at 999.80 compared with spot closing of 987.00. The number of contracts traded was 15,601.

ICICI Bank May 2014 futures were at a premium of 8.95 points at 1278.55 compared with spot closing of 1269.60. The number of contracts traded was 19,795.

HDFC May 2014 futures traded at a premium of 6.85 points at 859.15 compared with spot closing of 852.30. The number of contracts traded was 12,470.Among Nifty calls, 7000 SP from the May month expiry was the most active call with  an addition of 0.60 million open interest.Among Nifty puts, 6400 SP from the May month expiry was the most active put with  an addition of 0.03 million open interest.The maximum OI outstanding for Calls was at 7,000 SP (4.45 mn) and that for Puts was at 6,400 SP (4.15 mn). The respective Support and Resistance levels of Nifty are: Resistance 6699.9 --- Pivot Point 6671.4 --- Support --- 6624.05.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for May month contract. The top five scrips with highest PCR on OI were UPL 1.25, GAIL 1.04, Tech Mahindra 0.99, DR Reddy 0.93, and Ultra Cement 0.93.

Among most active underlying, Tata Steel witnessed contraction of 0.24 million  of Open Interest in the May month futures contract, followed by HDFC Bank witnessing  an addition of 1.15 million of Open Interest in the May  month contract; while Reliance Industries witnessed  an addition  of 0.13 million of Open Interest in the May month futures contract, State Bank of India witnessed  contraction of 0.08 million of Open Interest in the May month contract and finally, Aurobindo Pharma witnessed  an addition  of 0.29 million  of Open Interest in the May month's future contract.