Nifty ends below 7,600 mark on profit booking

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Thursday and finished the volatile session of trade with a cut of over two-tenths of a percent. After a positive opening, nifty slipped into the red in early deals as investors adopted a wait-and-watch approach ahead of Finance Minister Arun Jaitley’s maiden Budget presentation. Selling was witnessed on the commencement of budget as investors turned cautious and the nifty dipped almost a hundred points, however nifty recovered and rocketed into the positive territory as investors interpreted well the finance minister’s maiden budget speech. Profit booking emerged and the index plunged back into the red shedding about two percent from intraday high levels. Nifty ended the session below its crucial 7,600 mark with a cut of over two-tenths of a percent. Meanwhile, shares of defence companies and financial services companies with interests in insurance rose after Jaitley raised the cap for foreign direct investment (FDI) in these sectors to 49%. Furthermore, shares Power companies also rose after the budget proposed a 10-year tax holiday for such companies that start operations before FY2017.

After the three days of fall and growth oriented Budget, market is likely to show some recovery in near term. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7500-7400 puts indicating this is the trading range expectation. In today's session, the 7600, 7700 and 7800 Call strikes saw addition of 9.14, 4.39 and 8.91 lakh shares, respectively. On the other hand, 7500 and 7400 Put strikes saw addition of 4.56 and 6.39 lakh shares, respectively. Meanwhile, India VIX - the gauge of underlying volatility in the market – has declined drastically as uncertainty of Budget is over.

Most of the sectoral indices on the NSE were settled in the red, CNX PSU Bank declined by 1.04%, CNX IT down by 0.88%, CNX Auto down by 0.81%, Bank Nifty down by 0.73% and CNX Pharma down by 0.03%, while CNX Realty up by 4.74%, CNX Metal up by 0.84%, CNX Media up by 0.35%, CNX FMCG up by 0.22% and CNX Energy up by 0.12% remained the gainers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 12.22% and reached 15.96. The 50-share CNX Nifty decreased by 17.25 points or 0.23% to settle at 7,567.75. Nifty July 2014 futures closed at 7576.65 on Thursday at a premium of 8.90 points over spot closing of 7,567.75, while Nifty August 2014 futures ended at 7619.35 at a premium of 51.60 points over spot closing. Nifty July futures saw an addition of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 13.62 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 0.70 points at 150.05 compared with spot closing of 150.75. The number of contracts traded were 70,641.

HDFC Bank July 2014 futures traded at a premium of 6.65 points at 828.15 compared with spot closing of 821.50. The number of contracts traded were 27,711.

DLF July 2014 futures were at a discount of 1.30 points at 221.70 compared with spot closing of 223.00. The number of contracts traded were 41,312.

ITC July 2014 futures traded at a premium of 0.60 points at 343.60 compared with spot closing of 343.00. The number of contracts traded were 35,572.

Reliance Industries July 2014 futures traded at a premium of 9.90 points at 1000.90 compared with spot closing of 991.00. The number of contracts traded were 49,060.

Among Nifty calls, 7800 SP from the July month expiry was the most active call with an addition of 0.58 million open interests. Among Nifty puts, 7,500 SP from the June month expiry was the most active put with an addition of 0.24 million open interests. The maximum OI outstanding for Calls was at 8000 SP (10.35 mn) and that for Puts was at 7,500 SP (5.20 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7706.18 --- Pivot Point 7592.62 --- Support --- 7454.18.

The Nifty Put Call Ratio (PCR) finally stood at 0.77 for July month contract. The top five scrips with highest PCR on OI were ITC (1.85), Just Dial (1.29), Maruti Suzuki (0.92), ACC (0.89) and Gail (0.88).

Among most active underlying, State Bank of India witnessed an addition of 0.01 million of Open Interest in the June month futures contract, followed by IDFC witnessing an addition of 8.61 million of Open Interest in the June  month contract; while DLF witnessed a contraction of 3.01 million of Open Interest in the June month futures contract, Reliance Capital witnessed an addition 0.43 million of Open Interest in the June month contract and Infosys witnessed an addition of 0.03 million of Open Interest in the June month's future contract.