Nifty ends flat with negative bias; holds 7450 level

After witnessing drubbing for four consecutive sessions, fifty-stock index, Nifty, while consolidating on Monday, ended flat with a negative bias ahead of the release of crucial June CPI data. Sentiment on the street weakened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 723.48 crore on July 11, 2014. There was also some cautiousness among investors over the prevailing crisis in Portugal. However, losses were limited on the back of gains in oil and gas stocks after crude prices fell to a three-month low. Further, a firming trend at other Asian bourses, better than expected industrial output data and WPI inflation easing to 4-month low in June, brought some semblance of sanity in the falling index. Meanwhile, stocks from Capital Goods, Auto and Metal counters were supporting the markets, while those from Consumer Durables, Information Technology (IT) and Realty counters were adding to the underlying cautious undertone.

After gap down opening, nifty showed some strength in early morning trade but failed to sustain it on persistent profit-booking by funds and retail investors. Afterwards, nifty touched its intraday day low on afternoon trade but some recovery emerged from day’s low, which pushed nifty above its neutral line. Market, for rest of the session, fluctuated around the neutral line as investors remained on sidelines ahead of the release of crucial June CPI data. Finally, Nifty ended the session above its crucial 7,450 mark with negative bias.

The market movement is likely to be more downbeat this week as participants will turn their attention towards corporate earnings. Also, traders will resort to profit-booking as stocks had risen to unjustified levels in the pre-budget rally. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7500-7300 puts indicating this is the trading range expectation. In today's session, the 7400, 7500 and 7600 Call strikes saw addition of 1.56, 9.18 and 7.22 lakh shares, respectively. On the other hand, 7400, 7300 and 7100 Put strikes saw addition of 1.06, 1.96 and 3.78 lakh shares, respectively. 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 green, CNX Auto up by 0.89%, CNX Metal up by 0.81%, CNX PSU Bank up by 0.73%, Bank Nifty up by 0.29%, CNX Energy up by 0.15% and CNX Finance up by 0.03% while CNX IT down by 1.35%, CNX Media down by 1.17%, CNX Pharma down by 0.55%, CNX FMCG down by 0.49% and CNX Realty declined by 0.29% remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.02% and reached 15.56. The 50-share CNX Nifty decreased by 5.45 points or 0.07% to settle at 7,454.15. Nifty July 2014 futures closed at 7475.80 on Monday at a premium of 21.65 points over spot closing of 7,454.15, while Nifty August 2014 futures ended at 7517.65 at a premium of 63.50 points over spot closing. Nifty July futures saw an addition of 0.44 million (mn) units, taking the total outstanding open interest (OI) to 14.16 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, JP Associates July 2014 futures were at a discount of 0.05 points at 63.55 compared with spot closing of 63.60. The number of contracts traded were 10,862.

IDFC July 2014 futures traded at a discount of 2.30 points at 145.90 compared with spot closing of 148.20. The number of contracts traded were 13,989.

DLF July 2014 futures traded at a premium of 0.20 points at 207.55 compared with spot closing of 207.35. The number of contracts traded were 13,107.

Reliance Industries July 2014 futures traded at a premium of 3.60 points at 967.20 compared with spot closing of 963.60. The number of contracts traded were 23,641.

Tata Steel July 2014 futures traded at a discount of 0.95 points at 513.65 compared with spot closing of 514.60. The number of contracts traded were 16,860.Among Nifty calls, 7600 SP from the July month expiry was the most active call with an addition of 0.71 million open interests. Among Nifty puts, 7,400 SP from the June month expiry was the most active put with an addition of 0.02 million open interests. The maximum OI outstanding for Calls was at 8000 SP (9.96 mn) and that for Puts was at 7,500 SP (4.81 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7481.02 --- Pivot Point 7451.58 --- Support --- 7424.72.

The Nifty Put Call Ratio (PCR) finally stood at 0.71 for July month contract. The top five scrips with highest PCR on OI were ITC (1.55), BATA India (1.43), Just Dial (1.20), GAIL (0.94) and ACC (0.87).

Among most active underlying, Infosys witnessed a contraction of 0.05 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing a contraction of 0.26 million of Open Interest in the June  month contract; while Tata Steel witnessed a contraction of 0.90 million of Open Interest in the June month futures contract, IRB Infrastructure Developers witnessed a contraction 0.47 million of Open Interest in the June month contract and Reliance Industries witnessed an addition of 0.59 million of Open Interest in the June month's future contract.