Nifty ends marginally in red on Supreme Court's verdict on coal block allocations

After touching all time high in early trades, nifty failed to sustain its gains and ended the session marginally in red due to Supreme Court's ruling on coal allocations, which adversely hit investor sentiment. The Supreme Court on Monday held all coal blocks allocated by the government to various firms between 1993 and 2009 as illegal, adding that a final decision on the fate of the blocks would be taken next week. Shares of all companies that were allocated the blocks tumbled, with the verdict casting uncertainty over the fate of these blocks. Other companies which are dependent on such blocks to start and maintain their projects fell as well. Banking and Realty stocks too put pressure on the market but buying in defensive stocks like information technology (IT), Healthcare and FMCG, limited the losses. After gap up opening, nifty showed some strength in morning trades, but the sentiments turned pessimistic in late afternoon trades and the index started drifting lower, ending the session with a cut of over 6 points, however holding on to its crucial 7,900 mark.

After today’s Supreme Court verdict on coal block allocation case, Caution is also expected to prevail ahead of the expiry of derivatives on Thursday and gross domestic product data due on Friday. However, looking at the current upward momentum, some traders believe the market may extend upmove, may be till 8000 level on the Nifty by August series expiry.

Meanwhile, the top gainers from the F&O segment were Arvind, Apollo Hospitals Enterprise and Bharat Forge. On the other hand, the top losers were Jindal Steel, Hindalco Industries and JSW Energy. In the index option segment, maximum OI continues to be seen in the 8000-7900 calls and 7700-7800 puts indicating the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today’s session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.23% and reached 13.78. The 50-share CNX Nifty decreased by 6.90 points or 0.09% to settle at 7,906.30. Nifty August 2014 futures closed at 7915.45 on Monday at a premium of 9.15 points over spot closing of 7,906.30, while Nifty September 2014 futures ended at 7952.35 at a premium of 46.05 points over spot closing. Nifty August futures saw contraction of 1.53 million (mn) units, taking the total outstanding open interest (OI) to 12.83 mn units. The near month derivatives contract will expire on August 28, 2014.

From the most active contracts, IDFC August 2014 futures traded at a discount of 0.05 points at 146.55 compared with spot closing of 146.60. The number of contracts traded were 21,203.

HDFC Bank August 2014 futures traded at a premium of 0.30 points at 844.50 compared with spot closing of 844.20. The number of contracts traded were 27,039.

Hindalco Industries August 2014 futures traded at a premium of 0.55 points at 164.85 compared with spot closing of 164.30. The number of contracts traded were 23,010.

Reliance Industries August 2014 futures traded at a premium of 3.15 points at 998.65 compared with spot closing of 995.50. The number of contracts traded were 42,336.

Jindal Steel & Power August 2014 futures traded at a premium of 3.35 points at 253.20 compared with spot closing of 249.85. The number of contracts traded were 22,576. Among Nifty calls, 8000 SP from the August month expiry was the most active call with an addition of 0.86 million open interests. Among Nifty puts, 7,900 SP from the August month expiry was the most active put with an addition of 0.70 million open interests. The maximum OI outstanding for Calls was at 8000 SP (10.37 mn) and that for Puts was at 7,800 SP (7.40 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7950.38 --- Pivot Point 7924.17 --- Support --- 7880.08.

The Nifty Put Call Ratio (PCR) finally stood at 1.26 for August month contract. The top five scrips with highest PCR on OI were Kotak Bank (2.26), M&M (1.82), Maruti Suzuki (1.78), Cipla (1.77) and Ranbaxy (1.27). 

Among most active underlying, State Bank of India witnessed a contraction of 0.62 million of Open Interest in the August month futures contract, followed by Tata Steel witnessing a contraction of 3.44 million of Open Interest in the August month contract; while Reliance Industries witnessed a contraction of 5.94 million of Open Interest in the August month futures contract, HDFC Bank witnessed a contraction 7.79 million of Open Interest in the August month contract and Arvind witnessed an addition of 0.34 million of Open Interest in the August month's future contract.