Nifty ends lackadaisical session with a marginal cut; consolidates around 7400 level

Post two continuous days of gains, Nifty consolidated on Wednesday exhibiting a lackluster trading session as investors booked profits ahead of Finance Minister's pre-Budget talks with apex industry chambers and trade sector representatives on Friday. Moreover, global cues too remained sluggish as Asian markets exhibited choppy trade. However, sentiments got some support as the HSBC services Purchasing Managers’ Index rose to 50.2 in May from 48.5 in the previous month, above 50 mark that separates growth from contraction. FMCG stocks extended their fall for the second day in a row on account of profit taking on concerns that rising inflation levels would hurt volume growth, while Metal stocks extended their gains for a second straight day as China's HSBC Manufacturing Index rose to a four-month high. Banking stocks too witnessed recovery as ICICI Bank and State Bank of India gained over half a percent. Nifty made a sluggish start on back of profit booking amid weak global cues. Nifty traded near neutral line for most part of the day, lacking any significant upside triggers as investors engaged themselves in few stocks. Eventually, the index ended the day with a cut of over 13 points, however holding its crucial 7,400 mark.

The market is likely to remain range bound in the near term as there are not many triggers on the domestic front for quite some time and traders will keep an eye on Finance Minister's pre-Budget talks on Friday. On the options front, the put-call ratio open interest has remained range bound at lower levels of 0.67 to 0.90 levels on account of high activity seen on the call side. Foreign institutional investors (FIIs) since the start of the June series are seen net buyers in index options with net rise in open interest, indicating possibility of buying OTM call option. Looking at the index option data for June series maximum call OI is seen at 7500 followed by 7400 strike prices whereas maximum put OI is at 7200 & 7000 strike prices suggesting broader range is likely in between 7000-7500 levels.

The top gainers from the F&O Securities were IDBI Bank, Indiabulls Real Estate and Jain Irrigation Systems. The top losers were Shriram Transport Finance Company, Idea Cellular and HCL Technologies. India VIX - the gauge of underlying volatility in the market - has declined for second consecutive day by 1.45% to 15.56 on Wednesday, the lowest since March 09, showing traders expect fewer risks in the near term.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.45% and reached 15.56. The 50-share CNX Nifty decreased by 13.60 points or 0.18% to settle at 7,402.25. Nifty June 2014 futures closed at 7416.40 on Wednesday at a premium of 14.15 points over spot closing of 7,402.25, while Nifty July 2014 futures ended at 7449.95 at a premium of 47.70 points over spot closing. Nifty June futures saw contraction of 0.73 million (mn) units, taking the total outstanding open interest (OI) to 15.11 mn units. The near month June 2014 derivatives contract will expire on June 26, 2014.

From the most active contracts, IDFC June 2014 futures were at a premium of 0.90 points at 137.00 compared with spot closing of 136.10. The number of contracts traded was 16,383.

DLF June 2014 futures were at a premium of 1.70 points at 220.40 compared with spot closing of 218.70. The number of contracts traded was 18,788.

Indiabulls Real Estate June 2014 futures were at a premium of 0.85 points at 106.55 compared with spot closing of 105.70. The number of contracts traded was 18,637.

Jindal Steel June 2014 futures traded at a premium of 3.55 points at 330.20 compared with spot closing of 326.65. The number of contracts traded was 25,696.

Reliance Industries June 2014 futures traded at a premium of 7.30 points at 1085.55 compared with spot closing of 1078.25. The number of contracts traded was 16,808. Among Nifty calls, 7,500 SP from the June month expiry was the most active call with an addition of 0.19 million open interest. Among Nifty puts, 7,300 SP from the  June month expiry was the most active put with an addition of 0.06 million open interest. The maximum OI outstanding for Calls was at 7,500 SP (5.94 mn) and that for Puts was at 7,000 SP (4.77 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7426.58 --- Pivot Point 7408.97--- Support --- 7384.63.

The Nifty Put Call Ratio (PCR) finally stood at 0.90 for June month contract. The top five scrips with highest PCR on OI were Hero MotoCorp with 1.46, Grasim with 1.36, Mcleod Russel India with 1.16, Maruti Suzuki with 0.99, Havells with 0.93.

Among most active underlying, Tata Steel witnessed contraction of 0.26 million of Open Interest in the June month futures contract, followed by Reliance Capital witnessing an addition of 0.09 million of Open Interest in the June  month contract; while State Bank of India witnessed contraction of 0.24 million of Open Interest in the June month futures contract, ICICI Bank  witnessed contraction 0.51 million of Open Interest in the June month contract and Jaiprakash Associates witnessed contraction of 0.56 million  of Open Interest in the June month's future contract.