Nifty skids lower for second day in a row; ends below 7550 level

The CNX nifty, after opening gap-up on positive global cues and on some bargain buying in fundamentally strong stocks, traded listlessly throughout the day only to edge lower and end below the crucial 7550 level. The local benchmark continued its southward journey for second consecutive day on Thursday and finished the volatile day of trade with a cut of over seventeen points after witnessing lackluster trade throughout the day as increasing oil prices triggered macroeconomic worries for India. Although, the index opened on a positive note tracking strong global cues, it later erased all the early gains and edged lower into the negative territory as oil stocks such as Oil and Natural Gas Corp slumped on worries that higher gas pricing may be allowed only for incremental output while violence in Iraq continued to weigh.

Index recovered some ground from the lows and finished the volatile day of trade with a cut of over two tenths of a percent. Stocks from Oil & Gas counters led the fall of markets, which under pressure on the reports that the government may allow the higher gas price only for incremental production over and above the current levels. Moreover, many PSU stocks plunged after The Securities and Exchange Board of India (SEBI) on Thursday asked the government to cut its stake in listed state companies and cap it at 75% within three years. However, gains in information technology (IT), Consumer Durables and Healthcare stocks have restrained the market to extend losses. IT stocks gained after the US Federal Reserve on June 18, 2014 gave a positive assessment of the world's largest economy and committed to retain its accommodative monetary policy. Moreover, Railways related stocks were up as the commerce and industry ministry initiated the exercise to allow 100% FDI in several segments of railways, moving beyond its earlier plan to open select sectors.

Possibility of a small correction is reflected by the India VIX, a measure of the market's expectations of risks in the near-term, which rose about six percent in previous two sessions. The India VIX hit a high of 19.38 during intra-day trade in today’s session, which indicates that market participants expect uncertainty going ahead. India VIX is normally inversely proportionate to market direction.  Looking at the index option data for June series maximum call OI is seen at 7600 followed by 7700 strike prices whereas maximum put OI is at 7500 & 7400 strike prices suggesting broader range is likely in between 7400-7700 levels. The top gainers from F&O Securities were Tata Motors, Colgate Palmolive and UPL. The top losers were United Spirits, Bharat Petroleum Corporation and ONGC.

Most of the sectoral indices on the NSE were settled in the red, CNX Energy down by 2.51%, CNX PSU Bank down by 1.34%, Bank Nifty down by 1.01%, CNX Realty down by 0.67%, CNX Metal down by 0.66% and CNX Finance down by 0.61% while CNX IT up by 1.86%, CNX Pharma up by 0.90%, CNX FMCG up by 0.38%, CNX Auto up by 0.24% and CNX Media up by 0.19% were the losers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.87% and reached 18.74. The 50-share CNX Nifty decreased by 17.50 points or 0.23% to settle at 7,540.70. Nifty June 2014 futures closed at 7560.10 on Thursday at a premium of 19.40 points over spot closing of 7,540.70, while Nifty July 2014 futures ended at 7595.85 at a premium of 55.15 points over spot closing. Nifty June futures saw an addition of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 14.21 mn units. The near month derivatives contract will expire on June 26, 2014.

From the most active contracts, ONGC June 2014 futures traded at a premium of 0.65 points at 422.15 compared with spot closing of 421.50. The number of contracts traded were 29,919.

Tata Motors June 2014 futures were at a discount of 0.55 points at 438.55 compared with spot closing of 439.10. The number of contracts traded were 19,375.

Reliance Industries June 2014 futures were at a premium of 6.00 points at 1046.25 compared with spot closing of 1040.25. The number of contracts traded were 38,784.

ICICI Bank June 2014 futures were at a premium of 3.10 points at 1,416.90 compared with spot closing of 1,413.80. The number of contracts traded were 21,319.

Reliance Capital June 2014 futures traded at a discount of 1.10 points at 620.25 compared with spot closing of 621.35. The number of contracts traded were 15,792.Among Nifty calls, 7,600 SP from the June month expiry was the most active call with an addition of 0.98 million open interest. Among Nifty puts, 7,500 SP from the  June month expiry was the most active put with contraction of 0.23 million open interest. The maximum OI outstanding for Calls was at 7700 SP (6.90 mn) and that for Puts was at 7,500 SP (5.34 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7597.25--- Pivot Point 7549.90--- Support --- 7493.35.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for June month contract. The top five scrips with highest PCR on OI were Mcleod Russel India (1.64), Aurobindo Pharma (1.03), Gail (0.99), TCS (0.96) and Maruti Suzuki (0.93).

Among most active underlying, United Spirits witnessed a an addition of 0.91 million of Open Interest in the June month futures contract, followed by Reliance Industries witnessing an addition of 0.37 million of Open Interest in the June  month contract; while Oil & Natural Gas Corporation witnessed an addition of 1.82 million of Open Interest in the June month futures contract, State Bank of India witnessed a contraction 0.09 million of Open Interest in the June month contract and Infosys witnessed a contraction of 0.12 million of Open Interest in the June month's future contract.