Bears run berserk throughout session; Nifty ends below 7600 level

Trading sentiments continued to remain bearish on Friday as CNX Nifty finished the trade in the red breaching its crucial 7,500 mark on the back of Profit-booking by market-participants on the concerns of weak monsoons in the backdrop of somber global cues. After a positive opening, nifty showed some strength in early morning trades and scaled the 7600 mark on the back of a slew of measures proposed in the Union Budget to revive economic growth. However, profit booking emerging at higher levels pushed the index lower below its crucial 7,500 mark with a cut of about one and half percentage point. Sentiments were further dampened by concerns about Portugal's banking sector that highlighted contagion risk in the euro zone. Meanwhile, Banks too fell on potential losses on bond portfolios after the 10-year yield hit its highest level since May 21. On the flip side, the software and technology shares ended positive after Infosys reported a better-than-expected consolidated net profit for the first quarter ended June 30, 2014.

With budget out of the way, traders say the focus would shift to global markets, progress on monsoon, and earnings next week. After today’s sharp fall, some traders believe that bull market is over, while some believe the new bull market is ready to start. 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 7500, 7600 and 7700 Call strikes saw addition of 14.50, 10.62 and 8.87 lakh shares, respectively. On the other hand, some traders exited from 7400 and 7800 puts on the back of profit booking. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts. 

Most of the sectoral indices on the NSE were settled in the red, CNX Realty declined by 5.40%, CNX PSU Bank down by5.17%, CNX Metal down by 3.79%, CNX Finance down by 2.95%, CNX Energy down by 2.71%, Bank Nifty down by 2.53% and CNX Auto down by 1.09%, while CNX IT up by 1.20%, CNX Pharma up by 1.20%, CNX Media up by 0.70% and CNX FMCG up by 0.56% were remained the gainers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.52% and reached 15.72. The 50-share CNX Nifty decreased by 108.15 points or 1.43% to settle at 7,459.60. Nifty July 2014 futures closed at 7480.15 on Friday at a premium of 20.55 points over spot closing of 7,459.60, while Nifty August 2014 futures ended at 7521.55 at a premium of 61.95 points over spot closing. Nifty July futures saw an addition of 0.08 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 1.60 points at 146.75 compared with spot closing of 148.35. The number of contracts traded were 34,176.

DLF July 2014 futures were at a discount of 0.70 points at 208.70 compared with spot closing of 209.40. The number of contracts traded were 26,085.

Reliance Industries July 2014 futures traded at a premium of 6.20 points at 972.20 compared with spot closing of 966.00. The number of contracts traded were 33,722.

Tata Steel July 2014 futures traded at a discount of 9.80 points at 492.20 compared with spot closing of 502.00. The number of contracts traded were 16,794.

Reliance Capital July 2014 futures traded at a premium of 5.45 points at 560.85 compared with spot closing of 555.40. The number of contracts traded were 20,849. Among Nifty calls, 7700 SP from the July month expiry was the most active call with an addition of 0.85 million open interests. Among Nifty puts, 7,500 SP from the June month expiry was the most active put with a contraction of 0.24 million open interests. The maximum OI outstanding for Calls was at 8000 SP (10.18 mn) and that for Puts was at 7,500 SP (4.78 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7574.57 --- Pivot Point 7510.88 --- Support --- 7395.92.

The Nifty Put Call Ratio (PCR) finally stood at 0.73 for July month contract. The top five scrips with highest PCR on OI were ITC (1.54), Just Dial (1.27), Gail (0.87), ACC (0.85) and Sun Pharma (0.81).

Among most active underlying, Infosys witnessed an addition of 0.02 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing a contraction of 0.25 million of Open Interest in the June  month contract; while DLF witnessed a contraction of 0.14 million of Open Interest in the June month futures contract, IDFC witnessed a contraction 1.62 million of Open Interest in the June month contract and Reliance Industries witnessed an addition of 0.50 million of Open Interest in the June month's future contract.