Bears run berserk throughout session; Nifty ends below 7800 level

Bears hammered bulls throughout the session giving bulls no chance to bounce back, taking full control over the market, bears dragged Nifty below its crucial 7,800 mark. Although trade continued on pessimistic note, investors got some respite in final hour of trade as the index trimmed some losses and reduced the level of damage caused. Weak global equities and continuing unrest in the Middle East and Ukraine have dampened the sentiments of the market participants. Sentiment weakened further as Reserve Bank of India official stated that India continues to face threats on the growth and external sector fronts. However, some support to domestic markets came in from International Monetary Fund (IMF), which retained India’s economic growth forecast at 5.4% for Indian economy in 2015 and a stronger 6.4% growth next year. Traders were seen piling up positions in HealthCare and FMCG while selling was witnessed in Realty, Power and Metal sector stocks.

Earlier, the benchmark got off to a sedate opening tracking the dismal leads prevailing in Asian markets after a mostly flat day on Wall Street and continuing unrest in the Middle East and Ukraine. The frontline indices kept losing steam thereafter and even drifted to the lowest point in the session in afternoon trades. However, the indices managed to pare some of its losses in final hour of trades on the back of short covering in some heavyweight stocks.

The Indian markets saw a day of decline after running up rapidly in the past few sessions. Some traders believe that Nifty was in an over-bought position and adopting a cautious approach and preferred to lighten some positions ahead of the expiry of derivatives contracts on July 31, 2014. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7700-7500 puts indicating the expected trading range. In today's session, some traders exited from 7900, 7800 and 7700 Puts on the back of profit booking. On the other hand, 7800 and 7850 Calls saw addition of 6.89 and 6.48 lakh shares, respectively.

The top gainers from the F&O Securities were Glenmark Pharmaceuticals, Sun Pharmaceuticals Industries and Ranbaxy Laboratories. The top losers were Biocon, Arvind and Century Textiles & Industries. Moreover, India VIX - the gauge of underlying volatility in the market – has declined as traders turned cautious ahead of the expiry of derivatives contract on July 31, 2014.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.40% and reached 14.22. The 50-share CNX Nifty decreased by 40.15 points or 0.51% to settle at 7,790.45. Nifty July 2014 futures closed at 7785.70 on Friday at a discount of 4.75 points over spot closing of 7,790.45, while Nifty August 2014 futures ended at 7821.15 at a premium of 30.70 points over spot closing. Nifty July futures saw contraction of 1.60 million (mn) units, taking the total outstanding open interest (OI) to 14.84 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 premium of 0.55 points at 155.25 compared with spot closing of 154.70. The number of contracts traded were 22,982.

HDFC Bank July 2014 futures traded at a premium of 3.15 points at 838.05 compared with spot closing of 834.90. The number of contracts traded were 21,391.

Reliance Industries July 2014 futures traded at a premium of 1.05 points at 1021.05 compared with spot closing of 1020.00. The number of contracts traded were 32,722.

Tata Steel July 2014 futures traded at a premium of 1.00 points at 558.00 compared with spot closing of 557.00. The number of contracts traded were 21,631.

Reliance Capital July 2014 futures traded at a premium of 1.95 points at 589.50 compared with spot closing of 587.55. The number of contracts traded were 19,383.Among Nifty calls, 7800 SP from the July month expiry was the most active call with an addition of 0.68 million open interests. Among Nifty puts, 7,800 SP from the July month expiry was the most active put with a contraction of 1.01 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.71 mn) and that for Puts was at 7,700 SP (6.43 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7838.07 --- Pivot Point 7793.33 --- Support --- 7745.72.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for July month contract. The top five scrips with highest PCR on OI were ITC (1.76), Just Dial (1.70), Asian Paint (1.41), Hindalco (1.19) and HDFC (1.14).

Among most active underlying, Tata Steel witnessed a contraction of 2.09 million of Open Interest in the July month futures contract, followed by State Bank of India witnessing a contraction of 0.21 million of Open Interest in the July month contract; while Punjab National Bank witnessed a contraction of 1.10 million of Open Interest in the July month futures contract, Reliance Industries witnessed a contraction 2.27 million of Open Interest in the July month contract and Reliance Capital witnessed a contraction of 1.63 million of Open Interest in the July month's future contract.