Nifty skids lower for second day in a row; ends below 7600 level

The fifty stock index -- Nifty -- continued its southward journey for second consecutive day on Wednesday and finished the choppy day of trade with cut of half a percent as the domestic and global investors turn cautious ahead of the Union Budget to be presented by the Finance Minister tomorrow in the Parliament. After negative opening, nifty recouped its losses and entered into positive terrain in morning trade, but late hour selling pressure took the index into negative terrain. Thereafter, nifty failed to recover and ended the session below its crucial 7,600 mark. Sentiments on the street weakened as Industry body FICCI lowered India’s GDP growth forecast to 5.3 percent for the current fiscal lower than 5.5 percent projected earlier. Further, the Economic Survey, which was presented by government, failed to bring any cheer for the market participants. In addition, weak global cues and delay of monsoons dampened the sentiments. However, gains in Oil & Gas, FMCG and Consumer Durables stocks have restrained the market losses. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 422.72 crore on July 08, 2014.

Investors expected some positive surprises in the railway budget, which were not delivered and they now fear similar disappointment in the Union Budget. Meanwhile, Option segment witnessed a strong buying of out of the money calls and puts suggesting traders betting on a wild move on either side. 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 7.87, 8.36 and 5.56 lakh shares, respectively. On the other hand, 7600, 7500 and 7300 Put strikes saw addition of 4.18, 2.33 and 4.54 lakh shares, respectively.

The top gainers from F&O Securities were Hindustan Petroleum Corporation, Adani Ports and Indian Oil Corporation. The top losers were Apollo Tyres, Aurobindo Pharma and Ashok Leyland. Meanwhile, the volatility index (VIX), an indicator of traders' perceptions of near-term risks in the market, declined 5.17% to 18.18, suggesting participants are a lot more comfortable with market levels after the correction.

Most of the sectoral indices on the NSE were settled in the red, CNX Auto declined by 2.59%, CNX Realty down by 1.53%, CNX Media down by 1.20%, CNX IT down by 1.16%, CNX Pharma down by 0.93%, CNX Metal down by 0.58%, CNX PSU Bank down by 0.56%, CNX Finance down by 0.47% and Bank Nifty down by 0.44%, while CNX FMCG up by 0.80% and CNX Energy up by 0.32% were remained the gainers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 5.17% and reached 18.18. The 50-share CNX Nifty decreased by 38.20 points or 0.50% to settle at 7,585.00. Nifty July 2014 futures closed at 7598.65 on Wednesday at a premium of 13.65 points over spot closing of 7,585.00, while Nifty August 2014 futures ended at 7642.15 at a premium of 57.15 points over spot closing. Nifty July futures saw contraction of 0.09 million (mn) units, taking the total outstanding open interest (OI) to 13.61 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 2.20 points at 137.45 compared with spot closing of 139.65. The number of contracts traded were 20,396.

Reliance Industries July 2014 futures traded at a premium of 4.45 points at 1004.45 compared with spot closing of 1000.00. The number of contracts traded were 27,203.

Tata Steel July 2014 futures were at a discount of 10.45 points at 509.05 compared with spot closing of 519.50. The number of contracts traded were 14,987.

IRB Infrastructure July 2014 futures traded at a discount of 1.95 points at 236.85 compared with spot closing of 238.80. The number of contracts traded were 16,040.

ICICI Bank July 2014 futures were at a premium of 9.70 points at 1409.70 compared with spot closing of 1400.00. The number of contracts traded were 19,131.

Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 0.22 million open interests. Among Nifty puts, 7,500 SP from the June month expiry was the most active put with a contraction of 0.35 million open interests. The maximum OI outstanding for Calls was at 8000 SP (9.50 mn) and that for Puts was at 7,500 SP (5.33 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7639.52 --- Pivot Point 7595.58 --- Support --- 7541.07.

The Nifty Put Call Ratio (PCR) finally stood at 0.82 for July month contract. The top five scrips with highest PCR on OI were ITC (1.35), Just Dial (1.34), ACC (0.95), Maruti Suzuki (0.93) and UBL (0.88).

Among most active underlying, IRB Infrastructure Developers witnessed a contraction of 0.37 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing a contraction of 0.01 million of Open Interest in the June  month contract; while Infosys witnessed a contraction of 0.15 million of Open Interest in the June month futures contract, Reliance Capital witnessed a contraction 0.01 million of Open Interest in the June month contract and Larsen & Toubro witnessed an addition of 0.10 million of Open Interest in the June month's future contract.