Nifty ends below 7,650 mark on weak global cues

After witnessing consolidation in previous session, the domestic index Nifty drifted southward on Wednesday and ended the day’s trade with a cut of over Twenty-Nine points. Traders were seen piling positions in IT, TECK and Healthcare, while selling was witnessed in Realty, Consumer Durables and Metal stocks. Nifty opened on a cautious note as the World Bank had lowered its global growth projections for this year, saying the Ukraine crisis, a harsh winter in the United States and political strife in several middle-income countries had pulled down the outlook. Also, below normal monsoon forecast by the India Meteorological Department too dampened the investors' sentiment. However, the Index resiliently climbed higher in early morning session regaining its crucial 7650 mark supported by defensive sector stocks such as IT, teck and healthcare stocks. Sentiment also improved on expectation of India's factory output to rise for the first time in April since January, to reflect healthy growth in core industries. Nifty turned choppy and dipped into the red in early noon trade as market-participants rushed in to cash in their profits at higher levels, overlooking  May trade deficit, which though increased 11.2% month-on-month, but was down by 42% year-on-year to $11.23 billion.

Finally, Nifty ended the session below its crucial 7,650 mark with a cut of over twenty-nine points. Oil shares which had surged recently on hopes of gas price hike continued to witness profit taking. Moreover, FMCG shares lost ground on concerns that lower monsoon rains would hit agricultural output leading to lower rural incomes hurting volume growth. On the other hand, IT majors rebounded on buying at lower levels while the weakness in the rupee also aided the sentiment.

The market is likely to remain range bound in the near term as all eyes are now on the Budget which would be presented by the new government during the first week of July. However, CPI and IIP data could also be the short term trigger to drive the market. Looking at the index option data for June series maximum call OI is seen at 8000 followed by 7800 strike prices whereas maximum put OI is at 7500 & 7200 strike prices suggesting broader range is likely in between 7200-8000 levels. In today's session, many traders exited from 7450 and 7350 puts on the back of profit booking, while some traders have added their position in 7700, 7800 and 7900 calls on expectation of up move in index.

In the stock option segment, the open interest in IDFC has almost tripled to more than 61 million shares from 20 million shares since the February series. Significant OI addition with slow price movement indicates accumulation of long positions in the stock during the intermediate declines. This may lead to good upsides in coming days. The top gainers from the F&O Securities were Havells India, Infosys and Arvind. The top losers were HDIL, Unitech and IFCI. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious after the benchmark breached psychological level of 7650. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 2.39% and reached 17.06. The 50-share CNX Nifty decreased by 29.55 points or 0.39% to settle at 7,626.85. Nifty June 2014 futures closed at 7637.15 on Wednesday at a premium of 10.30 points over spot closing of 7,626.85, while Nifty July 2014 futures ended at 7670.65 at a premium of 43.80 points over spot closing. Nifty June futures saw contraction of 7400 units, taking the total outstanding open interest (OI) to 16.08 mn units. The near month June 2014 derivatives contract will expire on June 26, 2014.

From the most active contracts, Reliance Communications June 2014 futures were at a discount of 0.75 points at 146.75 compared with spot closing of 147.50. The number of contracts traded was 18,276.

HDFC Bank June 2014 futures were at a premium of 5.25 points at 825.55 compared with spot closing of 820.30. The number of contracts traded was 20,032.

Reliance Industries June 2014 futures traded at a premium of 7.85 points at 1103.85 compared with spot closing of 1096.00. The number of contracts traded was 26,430.

Yes Bank June 2014 futures were at a premium of 0.10 points at 555.90 compared with spot closing of 555.80. The number of contracts traded was 19,892.

Tata Steel June 2014 futures traded at a premium of 4.10 points at 550.60 compared with spot closing of 546.50. The number of contracts traded was 18,543.

Among Nifty calls, 7,700 SP from the June month expiry was the most active call with contraction of 0.82 million open interest. Among Nifty puts, 7,600 SP from the  June month expiry was the most active put with an addition of 0.38 million open interest. The maximum OI outstanding for Calls was at 8000 SP (5.71 mn) and that for Puts was at 7,500 SP (4.99 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7688.25--- Pivot Point 7638.65--- Support --- 7577.25.

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for June month contract. The top five scrips with highest PCR on OI were Mcleod Russel India with 1.52, Hero MotoCorp with 1.41, Aurobindo Pharma with 1.03, Tata Steel with 0.96, Maruti Suzuki with 0.95.

Among most active underlying, Infosys witnessed contraction of 0.09 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing contraction of 0.08 million of Open Interest in the June  month contract; while Tata Steel witnessed contraction of 0.08 million of Open Interest in the June month futures contract, Jaiprakash Associates witnessed contraction 2.52 million of Open Interest in the June month contract and ICICI Bank witnessed contraction of 0.09 million  of Open Interest in the June month's future contract.