Bears run berserk late in the session; Nifty ends tab above 7600 level

The fifty stock index -- Nifty -- continued its southward journey for second consecutive day on Friday and finished the choppy day of trade with a cut of over one and half percent as blue-chips such as Hindalco Industries slumped tracking weaker global markets ahead of U.S. jobs data later in the session. The market sentiment was also hit adversely after provisional data showed that foreign investors made heavy selling during the previous trading session. Furthermore, caution ahead of the Reserve Bank of India's policy review on Tuesday, its first since the new government's budget, where it is expected to leave its key interest rate unchanged, weighed over the sentiments as well.

Earlier, the benchmark got off to a weak start as the indices breached the psychological 7,700 level in the early moments of trade since investors largely remained influenced by the pessimistic sentiments prevailing in Asian markets. However, the key gauges made some attempts to recover in early afternoon trades however, pessimistic selling in the late hour put the index on a declining path. Afterwards, nifty kept losing momentum through the session and finally ended the session tad above its crucial 7,600 mark with a cut of over one and half percent.

A correction was overdue in Indian stock markets and Nifty could correct to 7400 levels. Rollovers in Nifty futures from July series to August was 67.61% against the three-month average of 63.30%. Moreover, Market wide rollovers were higher at 83.11% vs. three-month average of 82.05%. In the midcap space, high rollover was observed in Union Bank, Karnataka Bank, McLeod Russel, Biocon and Bata India while low rollovers were seen in Indraprastha Gas, Arvind, Just Dial, Glenmark and Petronet. 

Looking at the index option data for August series maximum call OI is seen at 8000 followed by 7800 strike prices whereas maximum put OI is at 7300 & 7500 strike prices suggesting broader range is likely in between 8000-7300 levels. The top gainers from the F&O segment were GMR Infrastructure, Glenmark Pharmaceuticals and Union Bank of India. The top losers were Sun TV, Titan and Hindalco.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 10.11% and reached 15.22. The 50-share CNX Nifty decreased by 118.70 points or 1.54% to settle at 7,602.60. Nifty August 2014 futures closed at 7622.60 on Friday at a premium of 20.00 points over spot closing of 7,602.60, while Nifty September 2014 futures ended at 7658.35 at a premium of 55.75 points over spot closing. Nifty August futures saw contraction of 0.74 million (mn) units, taking the total outstanding open interest (OI) to 12.47 mn units. The near month derivatives contract will expire on August 28, 2014.

From the most active contracts, DLF August 2014 futures traded at a discount of 2.65 points at 199.85 compared with spot closing of 202.50. The number of contracts traded were 21,117.

Reliance Industries August 2014 futures traded at a premium of 7.25 points at 983.25 compared with spot closing of 976.00. The number of contracts traded were 31,173.

Union Bank of India August 2014 futures traded at a premium of 0.40 points at 198.00 compared with spot closing of 197.60. The number of contracts traded were 22,133.

Tata Steel August 2014 futures traded at a premium of 3.00 points at 551.50 compared with spot closing of 548.50. The number of contracts traded were 22,542.

L&T August 2014 futures traded at a discount of 2.55 points at 1465.45 compared with spot closing of 1468.00. The number of contracts traded were 25,267. Among Nifty calls, 7800 SP from the August month expiry was the most active call with an addition of 1.15 million open interests. Among Nifty puts, 7,600 SP from the August month expiry was the most active put with an addition of 1.04 million open interests. The maximum OI outstanding for Calls was at 8000 SP (4.91 mn) and that for Puts was at 7,300 SP (5.59 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7681.57 --- Pivot Point 7637.73 --- Support --- 7558.77.

The Nifty Put Call Ratio (PCR) finally stood at 1.01 for August month contract. The top five scrips with highest PCR on OI were Bata India (1.40), Sun Pharma (1.04), Just Dial (0.99), BPCL (0.97) and IndusInd Bank (0.97).

Among most active underlying, State Bank of India witnessed a contraction of 0.05 million of Open Interest in the August month futures contract, followed by Tata Steel witnessing an addition of 0.21 million of Open Interest in the August month contract; while Larsen & Toubro witnessed an addition of 1.26 million of Open Interest in the August month futures contract, Reliance Industries witnessed an addition 0.90 million of Open Interest in the August month contract and ICICI Bank witnessed a contraction of 0.37 million of Open Interest in the August month's future contract.