Nifty ends marginally in red on profit-booking

After opening gap up and touching the 7,500-mark by rising nearly 136 points, the CNX Nifty fell as much as 234 points on heavy profit-booking, however the index recovered much of the losses and ended the session marginally in the red. Traders, who had made quick gains in the election rally, booked profits at higher levels as volatility increased before options expiry this week. Moreover, a mixed trend on other Asian bourses and a weak opening on the European markets also triggered selling on the domestic bourses. Healthy buying was observed in Auto, IT and Teck counters, while selling pressure was seen in Realty, Power and Consumer Durables counters.

The market is likely to remain volatile this week as traders would roll over positions in the futures & options (F&O) segment from the current month May series to June series. The May 2014 derivatives contracts expire on May 29, 2014. In the index option segment, maximum OI continues to be seen in the 6700-6800 calls and 6700-6600 puts indicating this as the expected trading range. In today's session, the 7500, 7600 and 7700 Call strikes saw addition of 6.47, 8.72 and 5.12 lakh shares, respectively. On the other hand, 7500 and 7400 Put strikes saw addition of 7.01 and 0.88 lakh shares, respectively. Meanwhile, some traders exited from 7100, 7200 and 7400 calls on the back of profit booking.

The top gainers from the F&O Securities were M&M, SAIL and SSLT. The top losers were HDIL, Mahindra & Mahindra Financial Services and Jaiprakash Power Ventures. Snapping six consecutive sessions’ losing streak, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious ahead of the F&O expiry this week.

Most of the sectoral indices on the NSE were settled in the red, CNX Realty down by 5.45%, CNX PSU Bank down by 2.49%, CNX Energy down by 1.75%, CNX Media down by 1.21%, Bank Nifty down by 0.72%, CNX Finance down by 0.60%, CNX Pharma down by 0.56%, CNX Metal down by 0.16% and CNX FMCG down by 0.13%, while CNX PSU Bank up by 1.34% and CNX Realty up by 1.06% were the gainers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 12.05% and reached 19.84. The 50-share CNX Nifty decreased by 8.05 points or 0.11% to settle at 7,359.05. Nifty May 2014 futures closed at 7361.80 on Monday at a premium of 2.75 points over spot closing of 7,359.05, while Nifty June 2014 futures ended at 7380.45 at a premium of 21.40 points over spot closing. Nifty May futures saw contraction of 1.87 million (mn) units, taking the total outstanding open interest (OI) to 19.14 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, Reliance Power May 2014 futures traded at a premium of 0.40 points at 97.10 compared with spot closing of 96.70. The number of contracts traded was 27,396.

HDFC Bank May 2014 futures were at a discount of 0.40 points at 799.60 compared with spot closing of 800.00. The number of contracts traded was 28,010.

DLF May 2014 futures traded at a premium of 0.80 points at 204.85 compared with spot closing of 204.05. The number of contracts traded was 30,758.

BHEL May 2014 futures were at a premium of 3.85 points at 260.10 compared with spot closing of 256.25. The number of contracts traded was 31,792.

Tata Motors May 2014 futures traded at a premium of 1.05 points at 444.70 compared with spot closing of 443.65. The number of contracts traded was 27,329. Among Nifty calls, 7,500 SP from the May month expiry was the most active call with an addition of 0.64 million open interest. Among Nifty puts, 7,000 SP from the May month expiry was the most active put with contraction of 0.35 million open interest. The maximum OI outstanding for Calls was at 7,500 SP (6.40 mn) and that for Puts was at 7,000 SP (4.58 mn). The respective Support and Resistance levels of Nifty are: Resistance 7485.68 --- Pivot Point 7377.37--- Support --- 7250.73.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for May month contract. The top five scrips with highest PCR on OI were PNB 1.41, UPL 1.35, SSLT 1.32, M&M 1.28 and Bank India 1.23.

Among most active underlying, SBI witnessed contraction  of 1.66 million of Open Interest in the May month futures contract, followed by Reliance Industries witnessing  contraction  of 3.05 million of Open Interest in the May  month contract; while United Spirits witnessed  contraction of 0.54 million of Open Interest in the May month futures contract, HDFC Bank of India witnessed  contraction 6.00 million of Open Interest in the May month contract and ICICI Bank witnessed  contraction  of 2.19 million  of Open Interest in the May month's future contract.