Nifty closes June F&O expiry day with a loss of a percent

Nifty continued its southward journey for second consecutive day and finished the choppy day of trade with a cut of one percent on the back of sharp losses in oil & gas stocks and volatility due to the expiry of derivative contracts. Heavy selling pressure was observed in oil and gas, metal and bank sectors, while healthy buying sustained in capital goods, consumer durables and automobile stocks. The domestic index CNX Nifty finished the June F&O series with a gain of about 258 points or 3.55%, after gaining over 6% in May series.

After a subdued opening, Nifty extended its downfall in early deals as investors reacted negatively to the Cabinet Committee on Economic Affairs’ (CCEA) decision of deferring the gas price-hike by three months, though some volatility and cover up was seen in latter part of the trade. Moreover, the Index breached its crucial 7,550 mark in early trades, with heavy selling in stocks like ONGC, BPCL, Reliance Industries and GAIL. However, the index pared some of their losses as Automobile and Capital goods stocks caught buyers' fancy as government extended excise duty concessions by six months. However, in the final hour of trade, the index witnessed a steep fall of about 60 points as European counterparts drifted downward after a positive start. Finally, Nifty ended the sluggish day of trade with a cut of one percentage point tad below its crucial 7,500 mark.

Now the June F&O series ended, traders were awaiting for the Budget that shall be announced in early next month. Until then, Nifty is likely to continue with volatility and may show some consolidation. Many traders rolled over positions in the futures & options (F&O) segment from the June 2014 series to July 2014 series. Sectorally, realty, capital goods and metal stocks are witnessing high rollovers while stocks from the technology, power and oil & gas space are witnessing relatively lower rollovers into the July series. Looking at the index option data for July series maximum call OI is seen at 7600 followed by 7700 strike prices whereas maximum put OI is at 7000 & 7200 strike prices suggesting broader range is likely in between 7600-7200 levels.

India VIX - the gauge of underlying volatility in the market - has declined for second consecutive day as traders remained on sidelines on the last day of May F&O series. The top gainers from the F&O segment were Shriram Transport Finance Company, UPL and Arvind. The top losers were ONGC, IOC and Petronet.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.33% and reached 17.70. The 50-share CNX Nifty decreased by 76.05 points or 1% to settle at 7,493.20. Nifty July 2014 futures closed at 7534.60 on Thursday at a premium of 41.40 points over spot closing of 7,493.20, while Nifty August 2014 futures ended at 7572.00 at a premium of 78.80 points over spot closing. Nifty July futures saw an addition of 3.29 million (mn) units, taking the total outstanding open interest (OI) to 14.21 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, HDFC Bank July 2014 futures traded at a premium of 10.90 points at 824.95 compared with spot closing of 814.05. The number of contracts traded were 34,941.

ONGC July 2014 futures traded at a premium of 0.90 points at 414.70 compared with spot closing of 413.80. The number of contracts traded were 20,725.

Reliance Industries July 2014 futures traded at a premium of 2.95 points at 1020.70 compared with spot closing of 1017.75. The number of contracts traded were 54,119.

ICICI Bank July 2014 futures were at a premium of 10.80 points at 1,417.85 compared with spot closing of 1,407.05. The number of contracts traded were 28,298.

SBI July 2014 futures were at a premium of 24.70 points at 2,678.45 compared with spot closing of 2,653.75. The number of contracts traded were 26,361.

Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 1.10 million open interests. Among Nifty puts, 7,400 SP from the June month expiry was the most active put with an addition of 0.74 million open interests. The maximum OI outstanding for Calls was at 7600 SP (10.16 mn) and that for Puts was at 7,400 SP (4.73 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7548.50 --- Pivot Point 7514.90 --- Support --- 7459.61.

The Nifty Put Call Ratio (PCR) finally stood at 0.91 for July month contract. The top five scrips with highest PCR on OI were Havells (3.25), Indiabulls Real Estate (1.77), Just Dial (1.59), Bharat Forge (1.47) and UBL (1.29).

Among most active underlying, State Bank of India witnessed an addition of 1.11 million of Open Interest in the June month futures contract, followed by Reliance Industries witnessing an addition of 6.16 million of Open Interest in the June  month contract; while ONGC witnessed an addition of 6.14 million of Open Interest in the June month futures contract, HDFC Bank witnessed an addition 1.14 million of Open Interest in the June month contract and ICICI Bank witnessed an addition of 4.46 million of Open Interest in the June month's future contract.