Nifty tumbles lower for third day in a row; ends below 7600 level

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Friday and finished the choppy day of trade with cut of over a percent as investors sold stocks across sectors amid escalating geopolitical tensions in Ukraine and Iraq. Sentiment weakened further as Indian rupee weakened against the US dollar because of the geo-political tensions and developments in the Middle East as well as foreign institutional investors (FIIs) sold shares worth a net Rs 73 crore on Thursday. Furthermore, India Ratings said that the government would not be able to meet its ambitious fiscal deficit target of 4.1 percent. However, the rating agency increased its FY15 GDP growth estimate marginally to 5.7 percent from the earlier 5.6 percent, largely on the back of an expected improvement in the industrial activity. Traders were seen piling up positions in HealthCare and FMCG while selling was witnessed in Realty, Power and Metal sector stocks.

The domestic benchmark extended its downfall after a subdued opening following weakening trend in Asian counters as investors sought out safe-haven assets on growing fears that conflicts in Ukraine and the Middle East could sap global growth, extending losses after US President Barack Obama authorized air strikes in Iraq. Nifty managed to pare some of the losses in last hour of the day ended the session above its crucial 7,550 mark.

The top gainers from the F&O segment were Apollo Hospitals Enterprise, Oracle Financial Services Software and Bharti Airtel, on the other hand the top losers were Jubilant Foodworks, Sesa Sterlite and Jaiprakash Power Ventures. 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.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.40% and reached 14.61. The 50-share CNX Nifty decreased by 80.70 points or 1.06% to settle at 7,568.55. Nifty August 2014 futures closed at 7,591.65 on Friday at a premium of 23.10 points over spot closing of 7,568.55, while Nifty September 2014 futures ended at 7,629.55 at a premium of 61.00 points over spot closing. Nifty August futures saw contraction of 0.88 million (mn) units, taking the total outstanding open interest (OI) to 12.20 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 0.70 points at 193.40 compared with spot closing of 194.10. The number of contracts traded were 9,877.

Hindalco Industries August 2014 futures traded at a premium of 0.50 points at 184.80 compared with spot closing of 184.30. The number of contracts traded were 9,329.

Reliance Industries August 2014 futures traded at a premium of 2.80 points at 983.80 compared with spot closing of 981.00. The number of contracts traded were 15,523.

Tata Steel August 2014 futures traded at a premium of 1.30 points at 539.20 compared with spot closing of 537.90. The number of contracts traded were 19,183.

Aurobindo Pharma August 2014 futures traded at a premium of 0.30 points at 724.80 compared with spot closing of 724.50. The number of contracts traded were 14,196. Among Nifty calls, 7700 SP from the August month expiry was the most active call with an addition of 0.81 million open interests. Among Nifty puts, 7,500 SP from the August month expiry was the most active put with an addition of 0.28 million open interests. The maximum OI outstanding for Calls was at 8000 SP (5.89 mn) and that for Puts was at 7,500 SP (5.16 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7593.96 --- Pivot Point 7567.04 --- Support --- 7541.62.

The Nifty Put Call Ratio (PCR) finally stood at 0.93 for August month contract. The top five scrips with highest PCR on OI were Maruti Suzuki (1.33), Hero MotoCorp (1.24), Bata India (1.23), Kotak Bank (1.19) and Ranbaxy (1.08).

Among most active underlying, State Bank of India witnessed an addition of 0.16 million of Open Interest in the August month futures contract, followed by Tata Steel witnessing a contraction of 0.19 million of Open Interest in the August month contract; while ICICI Bank witnessed a contraction of 0.25 million of Open Interest in the August month futures contract, Larsen & Toubro witnessed an addition 0.25 million of Open Interest in the August month contract and IRB Infrastructure Developers witnessed an addition of 0.51 million of Open Interest in the August month's future contract.