Nifty trims losses; ends above 7,250 mark

21 May 2014 Evaluate

After witnessing bloodbath in the first half, domestic benchmark Nifty pared most of its losses and ended the day’s trade with a cut of about 22 points as recovery in IT and Teck stocks continued for second straight day. Some solace also came after National Council of Applied Economic Research (NCAER) said that the business confidence in last quarter of 2013-14 improved further on expectations of a new electoral mandate that influenced the overall sentiments. However, the market sentiment was weak from early trade on account of profit taking in heavyweight banking and capital goods stocks. Besides, a weakening trend on Asian bourses following overnight losses on the US market also influenced the sentiment.

The correction in nifty is likely to continue for some more time as the market had seen strong run-up on Lok Sabha election outcome. Cabinet formation and Budget will be next triggers for the market. In the index option segment, maximum OI to be seen in the 7500-7400 calls and 7100-7000 puts indicating this is the trading range expectation.The volatility index, India VIX, has collapsed from 39.30 levels to 17.91 in merely seven sessions as hedge positions are unwound on passage of event risk on Friday. The top gainers from F&O Securities were IFCI, Indiabulls Real Estate and Power Finance Corporation. The top losers were Hindustan Zinc, Adani Ports and Voltas.

Most of the sectoral indices on the NSE were settled in the green, CNX Realty up by 2.14%, CNX Media up by 1.36%, CNX Auto up by 0.93%, CNX IT up by 0.83%, CNX FMCG up by 0.47% and CNX Metal up by 0.40%, while CNX PSU Bank down by 1.51%, Bank Nifty up by 1.05%, CNX Finance up by 0.79%, CNX Pharma up by 0.65% and CNX Energy declined by 0.19% remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.87% and reached 17.91. The 50-share CNX Nifty decreased by 22.60 points or 0.31% to settle at 7,252.90.

Among Nifty calls, 8,000 SP from the May month expiry was the most active call with contraction of 0.42 million open interest.Among Nifty puts, 7,000 SP from the May month expiry was the most active put with an addition of 0.42 million open interest. The maximum OI outstanding for Calls was at 8,000 SP (6.23 mn) and that for Puts was at 7,000 SP (5.20 mn). The respective Support and Resistance levels of Nifty are: Resistance 7291.13 --- Pivot Point 7248.92--- Support --- 7210.68.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for May month contract. The top five scrips with highest PCR on OI were Mcleodruss 1.67, Maruti 1.34, PNB 1.32, Siemens 1.20 and UPL 1.11.

Among most active underlying, Reliance Industries witnessed an addition of 1.52 million of Open Interest in the May month futures contract, followed by United Spirits witnessing contraction of 0.30 million of Open Interest in the May month contract; while HDFC Bank witnessed an addition of 0.46 million of Open Interest in the May month futures contract, State Bank of India witnessed an addition of 0.41 million of Open Interest in the May month contract and ICICI Bank witnessed an addition of 0.26 million of Open Interest in the May month's future contract.

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