Nifty ends marginally in red on profit-booking

After touching fresh all-time highs in the previous session, Nifty consolidated on Thursday exhibiting a lackluster trading session as investors turned cautious and booked profits ahead of the US non-farm payrolls data. Sentiment on the street weakened after World Bank in its reports suggested that India’s inflation still remains uncomfortably high and that new government should avoid fiscal slippage as it seeks to revive the economy. However, losses remained capped as some support came with the statement of Agriculture Minister that the monsoon will pick up pace next week and the government is prepared to deal with any eventuality in case of a shortfall. The activity in Indian services sector, which represents around 60% of Indian GDP, witnessed a solid rate of expansion in the month of June on the back of stronger new business inflows and better economic conditions, too failed to lift the sentiments on the street.

Traders were seen piling positions in Healthcare, Auto and Consumer Durables, while selling was witnessed in Realty, Oil & Gas and Power stocks. After gap up opening, nifty showed some strength in early morning trades, but the sentiments turned bearish in late morning trades and index slipped into red. Afterwards, Nifty traded near the neutral line for most part of the day’s trade, lacking any significant upside triggers as investors engaged themselves in few stocks. Eventually, the index ended the day’s trade with a cut of over 10 points, holding its crucial 7,700 mark.

The market is expected to maintain its upward momentum till the Budget next week and will decide on the further course of action after reading the fine prints of the Budget proposals. There could be some corrections in between, but the overall momentum for the market is seen moving northward. Looking at the index options data for July series maximum call OI is seen at 8000 followed by 7800 strike prices whereas maximum put OI is at 7500 & 7300 strike prices suggesting broader range is likely in between 7300-8000 levels.

The top gainers from F&O Securities were Glenmark Pharmaceuticals, UCO Bank and Bata India. The top losers were GMR Infrastructure, Jaiprakash Power Ventures and Jaiprakash Associates. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.34% and reached 17.80. The 50-share CNX Nifty decreased by 10.35 points or 0.13% to settle at 7,714.80. Nifty July 2014 futures closed at 7736.05 on Thursday at a premium of 21.25 points over spot closing of 7,714.80, while Nifty August 2014 futures ended at 7778.15 at a premium of 63.35 points over spot closing. Nifty July futures saw contraction of 0.16 million (mn) units, taking the total outstanding open interest (OI) to 14.35 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, GMR Infrastructure July 2014 futures traded at a premium of 0.20 points at 31.30 compared with spot closing of 31.10. The number of contracts traded were 19,144.

JP Associates July 2014 futures traded at a premium of 0.30 points at 72.25 compared with spot closing of 71.95. The number of contracts traded were 15,746.

Reliance Industries July 2014 futures traded at a premium of 9.45 points at 1014.35 compared with spot closing of 1004.90. The number of contracts traded were 19,638.

Tata Motors July 2014 futures were at a discount of 0.80 points at 469.25 compared with spot closing of 470.05. The number of contracts traded were 24,325.

Reliance Capital July 2014 futures were at a premium of 5.20 points at 663.70 compared with spot closing of 658.50. The number of contracts traded were 15,837.

Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 0.42 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.19 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.20 mn) and that for Puts was at 7,500 SP (4.39 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7744.03--- Pivot Point 7725.42--- Support --- 7696.18.

The Nifty Put Call Ratio (PCR) finally stood at 0.94 for July month contract. The top five scrips with highest PCR on OI were Maruti Suzuki (1.10), SUN TV (0.89), Just Dial (0.87), YES Bank (0.85) and ACC (0.84).

Among most active underlying, Tata Motors witnessed a contraction of 0.86 million of Open Interest in the June month futures contract, followed by Jaiprakash Associates witnessing an addition of 1.98 million of Open Interest in the June  month contract; while Reliance Capital witnessed an addition of 0.05 million of Open Interest in the June month futures contract, Reliance Infrastructure witnessed a contraction 0.08 million of Open Interest in the June month contract and United Spirits witnessed an addition of 0.26 million of Open Interest in the June month's future contract.