Nifty slips lower for third day in a row; ends below 7550 level

The fifty stock index -- Nifty -- extended its downfall for third consecutive day and finished the volatile day of trade with a cut of about four tenths of a percent. Though the index traded range bound till mid afternoon, it witnessed a drastic fall in last leg of session as caution prevailed over the growing unrest in Iraq over choking oil supplies and moreover, a weak monsoon forecast also hurt the sentiments. Investors remained on the sidelines as United States announced to send upto 300 military advisers to help Iraq fight insurgents of the Islamic State of Iraq and the Levant (ISIS). Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 420.51 crore on June 19, 2014. Further, weak trend in Asian stocks coupled with depreciation in rupee value also weighed on the sentiment. However, gains in Consumer Durables, Realty and information technology (IT) stocks have restrained the market to extend losses. Some support also came in with Petroleum Minister Dharmendra Pradhan’s statement that fuel supplies will not be impacted by the conflict in Iraq, nation’s second largest crude oil supplier. Shares of gems and jewellery companies edged higher after the Gems and Jewellery Export Promotion Council (GJEPC) statement that gems and jewellery exports is likely to rise to $44 billion during this financial year if there are positive policy changes. On the flip side, Oil& Gas stocks took a heavy beating ahead of Oil Minister Dharmendra Pradhan's meeting with Prime Minister, Narendra Modi on gas pricing issue.

The market is likely to remain volatile as investors and foreign funds were adopting a cautious approach, amid concerns that rising global crude prices will fuel inflation and raise import bill and hurt India’s economy growth. 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 Unitech, Titan Company and IFCI. The top losers were United Breweries, CESC and Allahabad Bank. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which indicates that market participants expect uncertainty going ahead. India VIX is normally inversely proportionate to market direction.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.56% and reached 18.84. The 50-share CNX Nifty decreased by 29.25 points or 0.39% to settle at 7,511.45. Nifty June 2014 futures closed at 7525.35 on Friday at a premium of 13.90 points over spot closing of 7,511.45, while Nifty July 2014 futures ended at 7559.75 at a premium of 48.30 points over spot closing. Nifty June futures saw contraction of 0.24 million (mn) units, taking the total outstanding open interest (OI) to 13.96 mn units. The near month derivatives contract will expire on June 26, 2014.

From the most active contracts, JP Associates June 2014 futures traded at a discount of 0.10 points at 71.40 compared with spot closing of 71.50. The number of contracts traded were 13,053.

ONGC June 2014 futures were at a discount of 0.75 points at 419.25 compared with spot closing of 420.00. The number of contracts traded were 13,563.

Reliance Industries June 2014 futures were at a premium of 2.05 points at 1040.40 compared with spot closing of 1038.35. The number of contracts traded were 20,838.

Tata Steel June 2014 futures traded at a premium of 0.20 points at 521.70 compared with spot closing of 521.50. The number of contracts traded were 18,810.

ICICI Bank June 2014 futures were at a premium of 5.25 points at 1,402.75 compared with spot closing of 1,397.50. The number of contracts traded were 23,494. Among Nifty calls, 7,600 SP from the June month expiry was the most active call with an addition of 0.15 million open interest. Among Nifty puts, 7,500 SP from the  June month expiry was the most active put with an addition of 0.12 million open interest. The maximum OI outstanding for Calls was at 7600 SP (7.00 mn) and that for Puts was at 7,500 SP (5.24 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7548.90 --- Pivot Point 7523.10 --- Support --- 7485.65.

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 Mcleod Russel India (1.57), Aurobindo Pharma (1.05), TCS (1.02), Asian Paint (0.98) and Gail (0.97).

Among most active underlying, United Spirits witnessed a contraction of 0.36 million of Open Interest in the June month futures contract, followed by Tata Steel witnessing a contraction of 0.03 million of Open Interest in the June  month contract; while State Bank of India witnessed an addition of 0.06 million of Open Interest in the June month futures contract, Reliance Capital witnessed a contraction 0.44 million of Open Interest in the June month contract and Infosys witnessed an addition of 4.97 million of Open Interest in the June month's future contract.