Nifty ends below 7650 level on profit booking

After touching fresh all-time highs in early morning session, the 50-share index, NSE Nifty entered into the red terrain in late morning trade as funds and retail investors indulged in booking profits at prevailing levels. Besides, a weakening trend on the other Asian markets following overnight losses on the US bourses also influenced the sentiment. However, deeper cut was seen in afternoon session after the Rail Budget was presented which did not match expectations as it lacked clarity on projects and proposals. However, gains in Healthcare stocks provided some solace for the index. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 198.57 crore on July 07, 2014. Eventually, the index ended the day’s trade with a cut of over two percent, below its crucial 7,650 mark. Investors maintained a cautious approach amid host of important triggers, including the Union Budget for 2014-15 schedule on July 10, 2014 and industrial production data.

In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7500-7300 puts indicating the trading range expectation. In today's session, the 7700, 7800 and 7900 Call strikes saw addition of 5.15, 2.66 and 4.17 lakh shares, respectively. On the other hand, 7600, 7500 and 7400 Put strikes saw addition of 3.37, 8.65 and 3.69 lakh shares, respectively.

The top gainers from F&O Securities were Just Dial, Ranbaxy Laboratories and Sun Pharmaceuticals Industries. The top losers were Unitech, India Cements and IRB Infrastructure Developers. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that market participants expect uncertainty going ahead.

All the sectoral indices on the NSE settled in the negative territory with CNX Realty down by 7.35%, CNX PSU Bank down by 4.72%, CNX Metal down by 4.21%, CNX Energy down by 3.78%, CNX Media down by 2.80%, Bank Nifty down by 2.41%, CNX Auto down by 2.32%, CNX Finance down by 2.08%, CNX IT down by 1.05%, CNX Pharma down by 0.95% and CNX FMCG down by 0.43%.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.17% and reached 19.18. The 50-share CNX Nifty decreased by 163.95 points or 2.11% to settle at 7,623.20. Nifty July 2014 futures closed at 7648.75 on Tuesday at a premium of 25.55 points over spot closing of 7,623.20, while Nifty August 2014 futures ended at 7695.15 at a premium of 71.95 points over spot closing. Nifty July futures saw contraction of 0.64 million (mn) units, taking the total outstanding open interest (OI) to 13.71 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, IDFC July 2014 futures traded at a discount of 1.85 points at 135.20 compared with spot closing of 137.05. The number of contracts traded were 22,780.

HDFC Bank July 2014 futures were at a premium of 13.30 points at 837.15 compared with spot closing of 823.85. The number of contracts traded were 19,432.

Reliance Industries July 2014 futures traded at a premium of 6.80 points at 1000.80 compared with spot closing of 994.00. The number of contracts traded were 40,100.

IRB Infrastructure July 2014 futures traded at a premium of 7.65 points at 246.40 compared with spot closing of 238.75. The number of contracts traded were 18,639.

ICICI Bank July 2014 futures were at a premium of 13.85 points at 1418.85 compared with spot closing of 1405.00. The number of contracts traded were 24,949. Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 0.67 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.11 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.11 mn) and that for Puts was at 7,500 SP (5.49 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7756.07 --- Pivot Point 7675.98 --- Support --- 7543.12.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.24), ITC (1.13), UBL (1.07), Maruti Suzuki (0.91) and ACC (0.93).

Among most active underlying, IRB Infrastructure Developers witnessed a contraction of 0.14 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing a contraction of 0.07 million of Open Interest in the June  month contract; while Larsen & Toubro witnessed an addition of 0.61 million of Open Interest in the June month futures contract, Infosys witnessed a contraction 0.28 million of Open Interest in the June month contract and Reliance Industries witnessed a contraction of 0.35 million of Open Interest in the June month's future contract.